Import & export

Develop a market entry strategy

2008-08-21T15:13:00.000-07:00

Many companies operate successfully in a niche market, without ever expanding in new markets. Nevertheless, some companies could achieve increased sales, brand awareness and business stability, entering a new market. Develop a strategy for entering the market involves a thorough analysis of competitors and your potential customers as possible.

Some of the relevant factors that are important in deciding the viability of entry in a particular market are suggested below:

Barierelor: There are legal barriers to be overcome to enter the market? For example, you need a license to enter the pub trade. Consider the need for an export licence to enter a particular international market. What are the limitations on trade, such as high levels and tariff quotas? Do you have the required level of awareness and training procedures for export?

Product or service: Look at the product or service that you have the intention to sell. Consider the following questions:

* How easy it is to maintain?
* Does it have a unique selling point (USP) or directly competitive advantage (DCA)?
* It is fashionable?
* Does it have limited appeal? If yes, would be a nine receptive market?
* It will be in demand for a long or short period of time?
* It is easy to transport or will it require a special treatment?
* The restricted product abroad? (for example, tariffs, quotas or non-tariff barriers)
* There are produced the necessary changes?

Resources: Work out how much of your company's resources can be dedicated in launching new markets - a factor in time and organisational, technical and marketing necessary. We will extend your resource too good? It is better to maintain a smaller customer base than happy to dissatisfy a larger one.

Contest: Look at the competition - is aggressively? Are the biggest suppliers to target the domestic market or international? Will this impact your likely success? How will your position in the market to stay from competitors?

Public Policy: find out if the government provides subsidies or taxes on the market in question. There are government incentives for exporters?

International markets: There are several ways to enter the international market. These include:

* Export (directly or indirectly)
* Licensing
* Joint venture
* Offshore production

There are two ways to export: selling your product or service directly from a company or client, or indirectly through the use of export intermediary. These include commissioned agents, distributors and export management or trading companies.

A joint venture with an already established business may be the most effective way to obtain entry into a market. They already know the market, taking place in the distribution and less capital is needed. International joint ventures are often achieved through the production licence or coastal, which requires either establishing your own facility or subcontracting of production at an assembly operator.

Rates: After he decided it viable to enter the market, the next major decision is the price. How much should be charged for the product or service? Consider the following costs:

* Production
* Pack
* Transport
* Promotion

Also, consider the basis on which it will sell the goods, namely, which is responsible for exporting various costs?

Source products from overseas

2008-08-09T21:11:00.000-07:00

In today's competitive global market products and services that are already a lot of benefits to income, or whether it regularly on ad hoc basis.

The number of types of products:

* Raw materials
* Component / Parts
* Finished
* Mro (maintenance, repair and inspection) Service
* Technology

Advantages
Sourcing product from overseas to help you, sir suit:

* Cost savings
Take advantage of favourable exchange rates *
* Access to products and technologies for use in domestic sueopseup.
* To provide a range of items
* To provide better quality products
* Overcome domestic shortages
* Reduce dependence on a limited domestic supply base.

Disadvantages
Already, of course, a certain danger when you import:

* Finance - tariffs and currency exchange rate fluctuations
* Political - embargo, sanctions or import quotas
* Mission - to arrive late or damaged goods
* Regulation - products can be targeted by Britain and the European Union, product testing and certification to suit demand.
* Culture - negotiation fails or is delayed because of the language and cultural barriers

Planning to the user's requirements
The first step is sourcing product from overseas users of the plan's requirements:

* Purpose - to achieve what you hope for the earnings?
* Products / Services - What do you wish to import? Concrete as possible
* Additional requirements - the need - Sales support?
* Warehousing - how to store goods imported from where?
* Lead time - is how quickly you need the item?
* Budget - The cost-effectiveness of the imported goods? Extra attention to the hidden

Sourcing products
Which products are required depending on the needs of each suit or limit state and a wider selection. Vendors. Key steps include the following:

* Identify the country needed to supply products
* Identify specific countries that preferred vendor (s)
* Assess the chances of any country or region
* Conducting a financial analysis
* Risks Identify all

To select a vendor
May decide to order directly from the manufacturer / service provider or use an intermediary. How to choose, what kind of international important factors to consider when selecting a vendor:

* Is a product / service that meets the requirements of users?
* For how many years they operate?
* They are financially stable? Make sure this is verified
* They have any marks on quality? They admitted to the United Kingdom?
* Someone else is supplying them? They provide a reference 2006 suit?
* They all belong to trade organizations and specialized agencies?
* What are their delivery schedules?
* The terms and conditions satisfactory to them?

Sourcing suppliers
International suppliers to find the right suit, with a careful, 2006:

* Referral to a colleague asked to supply business
* Search vendor to provide an international directory of Web product / service needs
* Enquiries International Trade Association, local embassies and trade desk is a list of potential suppliers dti
Reading your industry * The report on international trade as the main supplier
* Attention to the fact that the visit - the country finding mission

Preparing contracts
If the supplier is found to confirm that all parties meet to prepare a contract. :

* Product's sales price and conditions
* Payment methods
* Terms of the amendment
* Responsibilities of both parties
* Other conditions of the contract

Develop effective pricing strategies

2008-08-02T21:09:00.000-07:00

The most common mistake made when setting a sale price was too low pitch. This can occur through a mistake or do not understand all the costs associated with designing and marketing your products or through yielding to temptation to undercut the competition. Both these errors can lead to poor results, so that the guard over them.

Costs
Make sure you have established all the costs that will likely arise in creating and marketing your products. Do not just rely on hit or common sense, few companies get quotations for each major. Do not forget to factor in the percentage of overhead cost.

Customer perception
User comments about the value of May bear little or no relation to prices, and May they be ignorant, the prices charged by the competition, especially if the product or service is new. Many consumers perceive prices as a reliable guide to the quality they can expect to receive.

Competition
Consider what your competitors charge, but remember the price is the lightest element of marketing mix for an established company to be different. They would follow you down the price curve, forcing you into bankruptcy, far more than they could easily capture its customers with a lower price.

Terms and conditions
In the boom conditions, where the products are almost rationed, the overall level of prices for some products can be expected to rise disproportionately. The converse is also true. Seasonal factors may also contribute to changes in the general price level.

Distribution Channels
Your sale price will have to accommodate mark-up in your industry. For example, the May trade expected to set the sale price of double that charged by the supplier. If your market research shows that customers will pay £ 100 for the product purchased from shops, and, as a producer sells to the trade, will only be able to charge £ 50.

Exchange rates
If you are exporting goods, then the currency fluctuations can have a big impact on your return on sales. Always factor in the possible changes in exchange rates when working out of your margins.

Price is, after all, an element of marketing mix that is likely to have the greatest impact on your profitability. It is often more profitable for the new company to sell fewer items at a higher price, and getting their organization and product offerings sorted out, the key is to obtain a good focus on the margins, often with a range of prices and quality. If you are on the increase in prices, try to combine it with some new features (for example, the new design, color schemes) and improving services.

Find a freight forwarder

2008-07-24T21:05:00.000-07:00

The freight forwarders are experts in international maritime transport which offers businesses advice, assistance and useful contacts during export. Their expertise and knowledge of the distribution of goods abroad of inestimable value, and they will often save time and money.

A freight forwarder offers the following services:

1. Prepare prices

* Advice on transportation charges, consular fees and costs of special documentation
* Assistance for the preparation of the pro-forma invoice

2. Handling and transport

* Advice on different methods of shipment
* Advice on various types of packaging, labelling and containers available
* Make arrangements for packaging, labelling and containerising your goods at the port
* Book shipments aboard ships and aircraft
* Make arrangements for loading and unloading of your shipment at the port
* Number delivery
* Make arrangements for insurance
* The track shipments
* Arrange for clearance
* Make arrangements for the storage or supply
* Prepare documents for the collection of payment under the letter of credit

3. Rules

* You help them understand regulations
* You help them obtain an import permit

4. Documentation

* Collect all documents required
* Prepare Documents export declaration
* Prepare lading
* Literature Review precision
* Ensure that the goods comply with customs regulations export documents

Some freight forwarders specialize in organizing shipments to some countries while others focus on types of products.

Selection criteria for a freight forwarder:

* City of forwarding office (compared to your port of shipment)
* Experience in dealing with similar products cheers
* Experience in modes of transport
* The experience and knowledge of your export market
* Credit Rating
* Transport rate
* Schedule Delivery
* Insurance
* Recommendations other companies
* Membership in associations or professional organizations
* Fees and additional charges

Source freight forwarder by:

* Your visit local chambers of commerce to ask for a list of freight forwarders
* Search the Yellow Pages
* Ask an experienced exporter in an area similar to recommend a freight forwarder

Your responsibility
Even when using a freight forwarder, it is your company's ultimate responsibility to ensure correct documentation and procedures are respected. From training in export procedures and documentation is recommended for personnel involved in the export process. Contact the Institute of Export for more details.

Forecast future product usage

2008-07-09T13:02:00.000-07:00

Knowing what products and services to sell, to whom, for how much and in what quantity is crucial for your business' success. You should plan carefully to maximize sales and earnings performance for the transaction.

Planning and Forecasting are ways of predicting the future. With forecasts can anticipate and predict what is necessary to meet your goals.

The most commonly used methods of forecasting are either subjectively or objectively. The subjective method is used when contemplating purchase of new elements, while the objective method is better suited for frequently used items.

Subjective forecasts
Subjective or judgmental forecast is useful when a product does not have a job history, for example, new products or product upgrades. This method can also be used on existing products, if time constraints mean that objective forecast can not be applied. More often than not, subjective forecasts are subject to distortions such as optimism and overconfidence. It is the biggest disadvantage of this kind of forecast is the possibility of misleading information, could be costs for companies.

Target forecasts
Objective prognosis is most often used on the existing product lines. This includes research and analysis to determine what you need based on empirical data. To collect the most accurate data on the future use product, you should:

* Check historical data
* Identify and interpret trends
* Analysis of the existing use
* Factor for the known changes in future demand

Objective prognosis is less risky than subjective methods, as in the past quantitative results and facts to create more accurate forecasts. While the company should always aim to use objective prediction, there is still something to say for the good instinct - nobody knows how you do your business!

Doing a forecast
To prepare a forecast you must:

* Delivery times - could be anything from one week to four months. They need to know what your time frame is
* Predicted use - weekly, monthly or annually. Are there any 'special events' or ups and downs?
* Consultancy / Market Analysis Reports
* Customer information - what are the trends? Who are you targeting? What age group?
* What are the risks, if it is a new product?
* Who are your competitors?
* Are they perishable or non-perishable items?
* Budget
* Availability - the elements are easily accessible from the supplier?
* Product price - their prices are competitive? Are your margins sustainable? What savings can be made?
* Safety stock level - what is the minimum extent you want to keep inventory at a particular time?

Develop an export plan

2008-07-01T20:42:00.000-07:00

Many companies fail to consider overseas markets when the possibilities of increasing the company's success, nor the decision on the import and export can be one of the most lucrative of a company will always make.In an increasingly global economy, companies can hardly afford not to import and export goods and services. The government has a strong interest in the import and export trade and has a support service and many other measures specifically aimed at the more companies like yours to import and export. Take a look at our collection of guidance and insider tips below will help you in planning, legal and how your company a successful import and export business.

The purpose of an export plan is to gather facts, constraints and goals, and the setting of a timetable.

Export potential
Is your business ready for export?

Consider your company's reasons for exporting:

* Long-term expansion
* Strengthen Competitiveness
* Exploit the unique technology and expertise
* Improving the return on investment

Assess whether your product is suitable for export:

* Product standards and regulations
* Cost of adaptation and modification of your product for international sales
* Export licence requirements

Market research
The second important element of an export plan, the market research. Identify and evaluate the target market will enable you to:

* Understand the industry structure
* Forudsiger product demand
* Identify competition
* Determine the product changes are necessary

Research your industry sector in the export market, to find out the opportunities and growth areas, and identify any barriers. At this point, it is also a good idea to create a basic customer profile for your product.

Export Strategy
The next step is to develop an export strategy, defining how to enter the foreign market and find trade leads. Decide whether you want to export indirectly through intermediaries - which will require finding overseas representation - or do-it-yourself. The latter option means you have to consider how to promote products abroad, and the type of customer support, you will be able to deliver.

Prices and supply
It is important to consider product pricing and quotes, payment methods, shipping conditions and costs to precisely calculate your expenses and budget for them accordingly.

Rules and regulations
Next ensure that you understand and adhere to the rules and regulations for international trade. Being aware of such rules will help you convert them from the barriers in benefits.

Financing
Consider how you will finance your export plans, including calculations on your expenses such as salaries, travel, advertising, distribution, production, etc. State of the daily operation will be funded from an external source or internally. Include a projected sales forecast in your export plan - this will help you to measure success.

Champagne and Caviar

2008-05-23T12:36:00.000-07:00

Why are imports such big business in the United States and around the world? There are lots of reasons, but the three main ones boil down to:

* Availability: There are some things you just can't grow or make in your home country. Bananas in Alaska, for example, mahogany lumber in Maine, or Ball Park franks in France.

* Cachet: A lot of things, like caviar and champagne, pack more cachet, more of an "image," if they're imported rather than home-grown. Think Scandinavian furniture, German beer, French perfume, Egyptian cotton. Even when you can make it at home, it all seems classier when it comes from distant shores.

* Price: Some products are cheaper when brought in from out of the country. Korean toys, Taiwanese electronics and Mexican clothing, to rattle off a few, can often be manufactured or assembled in foreign factories for far less money than if they were made on the domestic front.

Aside from cachet items, countries typically export goods and services that they can produce inexpensively and import those that are produced more efficiently somewhere else. What makes one product less expensive for a nation to manufacture than another? Two factors: resources and technology. A country with extensive oil resources and the technology of a refinery, for example, will export oil but may need to import clothing.

The Right Stuff

Not everybody is cut out to be an international trader. This is not, for example, a career for the sales-phobic. If you're one of those people who would rather work on a chain gang than sell Girl Scout cookies, or if you blanch at the thought of making a sales pitch, then you don't want to be in import/export. This is also not a career for the organizationally challenged. If you're one of those let-the-devil-handle-the-details types whose idea of follow-up is waiting to see what happens next, you should think twice about international trading.

If, on the other hand, you're an enthusiastic salesperson, a dynamo at tracking things like invoices and shipping receipts, and your idea of heaven is seeing where new ideas and new products will take you, and if, to top it off, you love the excitement of dealing with people from different cultures, then this is the career for you.

It also helps if you already have a background in import/export. Most of the traders we talked with were well-versed in the industry before launching their own businesses. Peter P., who founded a Russian trading company, segued directly from his college major in international business to an operations position with an international frozen-meat trading company in Atlanta, which landed him in the right place at the right time.

"I speak both Russian and Ukrainian fluently," Peter says. "I'm of Ukrainian descent. I took Russian as a minor in college, initially as an easy grade. Little did I know when I graduated back in '89 that Russia would open up to the West shortly thereafter."

Trade Mission

2008-05-13T00:40:00.000-07:00

Whether you are a first-time exporter or already have experience of exporting, Trade Missions offer comprehensive support for companies from all sectors looking to increase sales. As a Mission Member, you will join a high profile group, with the flexibility to pursue individual business objectives as well as participation in group events.

Most, if not all, the industries involved in export will have a trade mission or several that can be used to coincide with a fact-finding trip to meet potential business partners. This can be seen as a market entry strategy.

Trade missions present companies with an opportunity to test the waters in selected overseas markets. In order for your foray into a trade mission to be successful, you are going to have to be open minded, skeptical, wary and you’re going to have to be willing to ask lots of very unpleasant questions.

If you can do all of these things, then you just might be able to actually participate in a trade mission and accrue some tangible benefit.

Choosing the target industry and the participants is a crucial aspect in any successful trade mission. When experienced business or economic development professionals have an opportunity to control these decisions, there is usually a consensus about the goals of the mission and the actual particulars of how it will be executed.

Translation & Interpreting Are Your Starting Points Towards a Global Profitable Business

2008-05-05T05:53:00.003-07:00

Talk the language of your customers
In today's global marketplace, business is constantly changing. Companies merge or partner with other firms to promote business internationally and this will lead to a need for cross-cultural training and orientation that is imperative in our global environment. Any lack of effective communication and cultural awareness would limit your knowledge of new business protocol and complicate your effort in finding suitable partners, agents or distributors. This could lead to expensive misunderstandings, and even loss of business.

In the U.K., one in five businesses is losing money because of language barriers. In northeast of England, for example, 20% of companies are losing business in international markets as a result of a lack of language skills and cultural awareness, 46% of businesses are aware of language barriers, and 20% of businesses are aware of cultural barriers. Hence, to avoid being one of these figures, businesses have to be prepared to communicate effectively with their customers. They need to be equipped with tips and tools to bridge verbal and nonverbal language differences, and learn how to practice ways to increase their effectiveness in the Arabic and Asian commercial environments.

If companies are working internationally, and want to be very successful in their business activities, they may need to consider translating their brochures & leaflets, exhibition handouts, product information sheets, technical manuals, contracts & legal documents and correspondence with their partners or customers.

Making a good impression is always important when meeting new customers, so is understanding their way of doing business. Failing to communicate in your customer’s language and wrong assumptions based on your own culture can cause problems, if not outright offence. In the same way your counterparts in any of the Arab and Asian countries are probably also making assumptions based on their own backgrounds. Businesses may have experience differences between European cultures, which lead to different ways of doing business. This situation is even more apparent between regions of the world with totally different cultures, such as those between Europe and Arab and Asian countries.

Remember, when marketing products overseas, regardless of the location, you should keep your target audiences in mind and be sensitive to local conditions.

Translation & Interpreting Are Your Starting Points Towards a Global Profitable Business

2008-05-05T05:53:00.001-07:00

Remember, when marketing products overseas, regardless of the location, you should keep your target audiences in mind and be sensitive to local conditions.

ASIA KEY FACTS

2008-04-29T20:52:00.000-07:00

Asia Pacific’s trading dominance can largely be credited to the Asia-Pacific Economic Cooperation (APEC) which was established in 1989 in response to the growing interdependence among Asia-Pacific economies. Almost doubling its membership, it now has 21 members countries and is the primary regional vehicle for promoting open trade, economic cooperation and promoting a sense of community. Members’ economies account for a combined GDP of more than US$16 trillion in 1998.

However, the Asia Pacific region is not a homogenous set of countries, possessing varying growth rates, structural problems and economic conditions. Korea, Thailand, Malaysia and Indonesia demonstrated weak and minus growth rates in the late half of the 1990s. Little progress in corporate restructuring and non-performing loans in the finance sector attributed to undermining investor confidence. However, an increase in domestic demand and government spending have boosted growth rates in 2000.

Hong Kong, Philippines and Singapore all remain strong despite a slight downturn in growth rates during the regional financial collapse in 1998. Taiwan and Australia sailed through the collapse with little adverse impact.

Key sectors in this region are manufacturing, agriculture and fishing industries. The majority of heavy manufacturing takes place in China, Japan, South Korea, and Taiwan, all of which have large, modern factories specialising in automobiles, electronic equipment, factory machinery, iron and steel, military weapons, ships, and textiles.

Petroleum and natural gas resources can be found throughout Indonesia and China. Substantial offshore reserves exist off the coasts of Indonesia, Malaysia and China. China possesses rich supplies of coal. However, it lacks the transportation infrastructure with which to transport it, so falls short of the potential wealth it could generate.

Southeast Asia is densely populated and largely rural. However, urbanisation has increased since the 1980s. Countries such as Japan, Taiwan, South Korea, Singapore, Hong Kong are largely urbanised. The trade-off of intense urbanisation and economic activity has been pollution, deforestation, depletion of soils and agriculture and other environmental issues. Private investment and consultancy to the tune of $30 to $40 billion is needed to tighten up controls, create policy and build environmental frameworks.

Opportunities in the ASEAN region vary from country to country. A brief assessment would include infrastructure, goods and services which allows for developing economies to grow – ‘quality of life goods’ (consumer goods are not considered a priority), education and training, agri-business management, information communication technology, healthcare in remote areas, mining, hydropower and forestry.

A single window for International Trade

2008-04-29T20:50:00.001-07:00

The UK International Trade Single Window (UK ITSW) is an electronic system that will dramatically simplify international trade procedures in the future for both Trade and Government. It is a tool that will allow a business to submit once all the data required by Government to clear import or export goods.

Currently, when submitting information to individual Government departments for importing and exporting, businesses have to deal with differing methods of authentication, inconsistent standards of information and repeatedly provide the same information.

Through the UK ITSW, businesses will soon be able to access all the regulatory information they need from Government in the one place and, in time, will be able to complete the necessary administrative processes for importing and exporting online. In the longer term, businesses will be able to submit all the data required by Government just once.

When introduced UK ITSW will dramatically support the complex import and export processes and will encourage more businesses to trade internationally for the first time.

A single window for International Trade

2008-04-29T20:50:00.000-07:00

When introduced UK ITSW will dramatically support the complex import and export processes and will encourage more businesses to trade internationally for the first time.

Shipping Your Product Overseas

2008-04-24T01:29:00.000-07:00

Handling and Determining Method of Shipping

Talk to your freight forwarder for their advice on whether you should ship by sea, air, rail or a combination? There are many considerations when selecting a method of shipping and specifying the handling of your shipment.

Packing Your Products for Shipment

Exporters should keep four potential problems in mind when designing an export shipping crate: breakage, moisture, pilferage and excess weight. View these tips on product packaging for overseas transport.

Labeling

Learn how to correctly label your shipments to insure they get where they need to go.

Insuring Your Shipments

Damaging weather conditions, rough handling by carriers, and other common hazards to cargo make insurance an important protection for U.S. exporters

Shipping Agricultural Products

Learn how to ship your agricultural products and the documentation required by both the U.S. and the country of destination

Handling and Determining Method of Shipping

The handling of transportation is similar for domestic and export orders.

Export marks are added to the standard information on a domestic bill of lading. These marks show:

the name of the exporting carrier,

the latest allowed arrival date at the port of export, and

instructions for the inland carrier to notify the international freight forwarder by telephone upon arrival.

The overseas buyer usually specifies which export marks should appear on the cargo for easy identification by receivers. For more information see information on Labeling.

Determining Method of Shipping

Exporters may find it useful to consult with a freight forwarder when determining the method of international shipping. Since carriers are often used for large and bulky shipments, the exporter should reserve space on the carrier well before actual shipment date. This reservation is called the booking contract.

International shipments are increasingly made on a through bill of lading under a multimodal contract. The multimodal transit operator (frequently one of the transporters) takes charge of and responsibility for the entire movement from factory to final destination.

The cost of the shipment, the delivery schedule, and the accessibility to the shipped product by the foreign buyer are all factors to consider when determining the method of international shipping. Although air carriers can be more expensive, their cost may be offset by lower domestic shipping costs (for example, using a local airport instead of a coastal seaport) and quicker delivery times. These factors may give the U.S. exporter an edge over other competitors.

Before shipping, the U.S. firm should be sure to check with the foreign buyer about the destination of the goods. Buyers often want the goods to be shipped to a free-trade zone or a free port where they are exempt from import duties

Regulations & Licenses

2008-04-17T01:13:00.000-07:00

Most export transactions do not require specific approval in the form of licenses from the U.S. Government. Regulations regarding all exports must be followed. Use this section as a primer to familiarize yourself with the regulations and licenses that may apply to your product(s).

Sophisticated and high technology products; short supply items; technical information and products that have defense, strategic, weapons development, proliferation or law enforcement applications can be subject to export licenses.

Major factors in determining whether an export license is required include the destination and end-use of the product or service.

To determine whether a license is needed to export a particular commercial product or service, an exporter must first classify the item by identifying what is called an Export Control Classification Number (ECCN) for the item, according to the EAR, and then must reference the Commerce Control List. Consult the Bureau of Industry and Security about export controls, classification and licensing according to the EAR and CCL.

Export credit agency

2008-04-11T02:29:00.000-07:00

Export credit agencies and investment insurance agencies, commonly known as ECAs, are institutions which act as finance companies for private domestic entities who conduct business abroad. ECAs provide government-backed loans, guarantees and insurance (Trade Credit Insurance) covering both commercial and political risk. Most industrialized nations have at least one ECA, which is usually a national, public or publicly-mandated agency that usually supports companies from their home country.

Most countries of the Organization for Economic Co-operation and Development (OECD) have at least one ECA, which is an official or quasi-official branch of their government (with private capital but acting on behalf or with the mandate of the national government, e.g. COFACE in France). The officially supported export credits provided by these agencies are distinct from private export credit financing, which is not discussed here.

The Berne Union, or officially, the International Union of Credit & Investment Insurers, is the leading international organisation and community for the export credit and investment insurance industry. The Berne Union and Prague Club combined have more than 70 member companies spanning the globe.

Participants to the Arrangement on Officially Supported Export Credits have been working since 1978 to reach agreement on common guidelines for minimum standards in payment terms and credit periods (OECD Consensus). Although negotiations are facilitated by the OECD, not all OECD member countries are participants; the Participants are Australia, Canada, the European Community, Japan, Korea, New Zealand, Norway, Switzerland and the United States (as of December 2005). Since 1999, country risk categories have also been harmonized by the Arrangement and minimum premium rates allocated to the various risk categories. This is intended to ensure that competition takes place via pricing and the quality of the goods exported, and not in terms of how much support a state provides for its exporters. The Arrangement does not extend to exports of agricultural commodities or military equipment. A recent decision at the World Trade Organization (WTO) indicates that the use of officially supported export credits in agriculture is bound by WTO members' commitments with respect to subsidised agricultural exports (see the WTO Appellate Body decision on the Brazil-US cotton case as it relates to the General Sales Manager (GSM) 102 and 103 programs and other US agricultural export credits).

For instance, a transnational corporation, or investor, will seek insurance cover from an ECA when selling goods or services to, or investing money in, a foreign country. The premium charged by the ECA depends on the political and economic stability of the foreign country, the buyer's credit profile and the credit terms, among other factors.

ECAs are now the world’s biggest group of public International Financial Institutions, collectively exceeding the World Bank Group in size.

ECAs currently finance or underwrite about $430 billion of business activity abroad - about $55 billion of which goes towards project finance in developing countries - and provide $14 billion of insurance for new foreign direct investment, dwarfing all other official sources combined (such as the World Bank and Regional Development Banks, bilateral and multilateral aid, etc.). As a result of the claims against developing countries that have resulted from ECA transactions, ECAs hold over 25% of these developing countries' US$2.2 trillion debt. Sadly, these data are unreliable in the absence of source, definition, or date.

At EU level, the European Commission, in particular DG Trade, plays a role in the harmonization of Export Credit Agencies and the co-ordination of policy statements and negotiation positions.

Observers argue for and against export credits. Some observers view them as nothing more than export subsidies by a different name. Others argue that export credits may further the burden of debt that poor countries already suffer. The activities of ECAs are considered by some to be a type of welfare for large corporations. ECAs are also criticised for insuring companies against political actions which aim to protect workers' rights, other human rights or the natural environment in the countries where the investment is being made. Advocates of ECAs have assertions of their own, such as the following: export credits allow impoverished importers to purchase needed goods that would otherwise be unaffordable; export credits are components of a broader strategy of trade policies; and government involvement can achieve results that the private sector cannot, such as applying greater pressure on a recalcitrant borrower. These arguments for and against export credits are not new, having been studied at length in academic literature (for a good general discussion, see Baron, David P. The Export-Import Bank: An Economic Analysis. Academic Press. 1983.; or Eaton, Jonathan. “Credit Policy and International Competition.” Strategic Trade Policy and the New International Economics, ed. Paul Krugman. MIT Press, Cambridge Mass. 1988.). Of course, these arguments also spill over into broader literature and it is certainly important not to confuse the agency that applies the export credits, the ECA, with the actual policy of providing guarantees or direct lending support to facilitate exports. For example, some accuse the Canadian Wheat Board of providing export credits (for a strident representation of this argument, see Goodloe, Carol. “The Canadian Wheat Board: Government Guarantees and Hidden Subsidies?” The Estey Centre Journal of International Law and Trade Policy, Vol 5 No 2, p 102-122. 2004.).

ECAs see themselves as facilitators of export and/or investment to both developed and emerging markets. By engaging in these activities, ECAs often act in cooperation with other international financial institutions involved in supporting the successful development of worldwide trade.

ECAs are increasingly requiring member countries to undertake anti-corruption due diligence when applying for export credit. This is due to the increased international enforcement of anti-bribery laws.

payment methods in international business

2008-04-08T23:50:00.000-07:00

1) Cash in advance

Receiving payment by cash in advance of the shipment might seem ideal. In this situation, the exporter is relieved of collection problems and has immediate use of the money. A wire transfer is commonly used and has the advantage of being almost immediate. Payment by check, may result in a collection delay of up to six weeks. Therefore, this method may defeat the original intention of receiving payment before shipment.

Many exporters accept credit cards in payment for exports of consumer and other products, generally of a low follar value, sold directly to the end user. Domestic and international rules governing credit card transactions sometimes differ, so U.S. merchants should contact their credit card processor for more specific information. International credit card transactions are typically done by telephone or fax. Due to the nature of these methods, exporters should be aware of fraud. Merchants should determine the validity of transactions and obtain the proper authorizations.

For the buyer, however, advance payment tends to create cash flow problems, as well as increase risks. Furthermore, cash in advance is not as common in most of the world as it is in the United States. Buyers are often concerned that the goods may not be sent if payment is made in advance. Exporters that insist on this method of payment as their sole method of doing business may find themselves losing out to competitors who offer more flexible payment terms.

2) Documentary letters of credit and Documentary drafts

Documentary letters of credit or documentary drafts are often used to protect the interests of both buyer and seller. These two methods require that payment be made based on the presentation of documents conveying the title and that specific steps have been taken. Letters of credit and drafts can be paid immediately or at a later date. Drafts that are paid upon presentation are called sight drafts. Drafts that are to be paid at a later date, often after the buyer receives the goods, are called time drafts or date drafts.

Since payment by these two methods is made on the basis of documents, all terms of payment should be clearly specified in order to avoid confusion and delay. For example, "net 30 days" should be specified as "30 days from acceptance." Likewise, the currency of payment should be specified as "US$30,000." International bankers can offer other suggestions.

Banks charge fees - based mainly on a percentage of the amount of payment - for handling letters of credit and smaller amounts for handling drafts. If fees charged by both the foreign and U.S. banks are to be applied to the buyer's account, this should be explicitly stated in all quotations and in the letter of credit.

The exporter usually expects the buyer to pay the charges for the letter of credit, but some buyers may not agree to this added cost. In such cases, the exporter must either absorb the costs of the letter of credit or risk losing that potential sale. Letters of credit for smaller amounts can be somewhat expensive since fees can be high relative to the sale.

a) Letters of credit

A letter of credit adds a bank's promise to pay the exporter to that of the foreign buyer provided that the exporter has complied with all the terms and conditions of the letter of credit. The foreign buyer applies for issuance of a letter of credit from the buyer's bank to the exporter's bank and therefore is called the applicant; the exporter is called the beneficiary.

Payment under a documentary letter of credit is based on documents, not on the terms of sale or the physical condition of the goods. The letter of credit specifies the documents that are required to be presented by the exporter, such as an ocean bill of lading (original and several copies), consular invoice, draft, and an insurance policy. The letter of credit also contains an expiration date. Before payment, the bank responsible for making payment, verifies that all document conform to the letter of credit requirements. If not, the discrepancy must be resolved before payment can be made and before the expiration date.

A letter of credit issued by a foreign bank is sometimes confirmed by a U.S. bank. This confirmation means that the U.S. bank (the confirming bank), adds its promise to pay to that of the foreign bank (the issuing bank). If a letters of credit is not confirmed, it is advised through a U.S. bank and thus called an advised letter of credit. U.S. exporters may wish to confirm letters of credit issued by foreign banks if they are unfamiliar with the foreign banks or concerned about the political or economic risk associated with the country in which the bank is located. An Export Assistance Center or international banker can assist exporters in evaluating the risks to determine what might be appropriate for specific export transactions.

A letter of credit may either be irrevocable and thus, unable to be changed unless both parties agree; or revocable where either party may unilaterally make changes. A revocable letter of credit is inadvisable as it carries many risks for the exporter.

A change made to a letter of credit after it has been issued is called an amendment. Banks also charge fees for this service. It should be specified in the amendment if the exporter or the buyer will pay these charges. Every effort should be made to get the letter of credit right the first time since these changes can be time-consuming and expensive.

To expedite the receipt of funds, wire transfers may be used. Exporters should consult with their international bankers about bank charges for such services.

When preparing quotations for prospective customers, exporters should keep in mind that banks pay only the amount specified in the letter of credit - even if higher charges for shipping, insurance, or other factors are incurred and documented.

Upon receiving a letter of credit, the exporter should carefully compare the letter's terms with the terms of the exporter's pro forma quotation. This step is extremely important, since the terms must be precisely met or the letter of credit may be invalid and the exporter may not be paid. If meeting the terms of the letter of credit is impossible or if any of the information is incorrect or even misspelled, the exporter should contact the customer immediately and ask for an amendment to the letter of credit.

The exporter must provide documentation showing that the goods were shipped by the date specified in the letter of credit or the exporter may not be paid. Exporters should check with their freight forwarders to make sure that no unusual conditions may arise that would delay shipment.

Documents must be presented by the date specified for the letter of credit to be paid. Exporters should verify with their international bankers that there will be sufficient time to present the letter of credit for payment.

Exporters may request that the letter of credit specify that partial shipments and transshipment will be allowed. Specifying what will be allowed can prevents unforeseen last minute problems.

b) Documentary drafts

A draft, sometimes also called a bill of exchange, is analogous to a foreign buyer's check. Like checks used in domestic commerce, drafts carry the risk that they will be dishonored. However, in international commerce, title does not transfer to the buyer until he pays the draft, or at least engages a legal undertaking that the draft will be paid when due.

Sight drafts

A sight draft is used when the exporter wishes to retain title to the shipment until it reaches its destination and payment is made. Before the shipment can be released to the buyer, the original ocean bill of lading (the document that evidences title) must be properly endorsed by the buyer and surrendered to the carrier. It is important to note that air waybills of lading, on the other hand, do not need to be presented in order for the buyer to claim the goods. Hence, risk increases when a sight draft is being used with an air shipment.

In actual practice, the ocean bill of lading is endorsed by the exporter and sent via the exporter's bank to the buyer's bank. It is accompanied by the sight draft, invoices, and other supporting documents that are specified by either the buyer or the buyer's country (e.g., packing lists, consular invoices, insurance certificates). The foreign bank notifies the buyer when it has received these documents. As soon as the draft is paid, the foreign bank turns over the bill of lading thereby enabling the buyer to obtain the shipment.

There is still some risk when a sight draft is used to control transferring the title of a shipment. The buyer's ability or willingness to pay might change from the time the goods are shipped until the time the drafts are presented for payment; there is no bank promise to pay standing behind the buyer's obligation. Additionally, the policies of the importing country could also change. If the buyer cannot or will not pay for and claim the goods, returning or disposing of the products becomes the problem of the exporter.

Time drafts and date drafts

A time draft is used when the exporter extends credit to the buyer. The draft states that payment is due by a specific time after the buyer accepts the time draft and receives the goods (e.g., 30 days after acceptance). By signing and writing "accepted" on the draft, the buyer is formally obligated to pay within the stated time. When this is done the time draft is then called a trade acceptance. It can be kept by the exporter until maturity or sold to a bank at a discount for immediate payment.

A date draft differs slightly from a time draft in that it specifies a date on which payment is due, rather than a time period after the draft is accepted. When either a sight draft or time draft is used, a buyer can delay payment by delaying acceptance of the draft. A date draft can prevent this delay in payment though it still must be accepted.

When a bank accepts a draft, it becomes an obligation of the bank and thus, a negotiable investment known as a banker's acceptance. A banker's acceptance can also be sold to a bank at a discount for immediate payment.

Source : www.unzco.com

THE 5 INTERNATIONALIZATION STEPS

2008-04-03T07:53:00.000-07:00


1. To make a commercial offer (or a call for tenders) and to be able to use the Incoterms You have to master the run risks as soon as you have begun an international sale or purchase. You have also to use the incoterms to ensure a good freight. The Incoterms define responsibilities and obligations of a seller and a buyer in the framework of international commercial contracts. 2. To understand the importance of logistics and to adopt a strategy Do not uderestimate the importance of each component of logistics to have a negotiation power with your partners. Then, thanks to these information, establish a logistic plan with the best proportion cost/efficiency to ensure a good freight of goods. 3. Master of transport operations You have to be familiar with different means of transport and to choose the most appropriate one for the carried merchandise and its destination. In addition to that, you have to anticipate damages and possible disputes about the chosen mean to avoid discontents from customers. You have to insure yourself against different transport risks in order to be completely compensated for potential damages. You also have to be familiar with costs of transport auxiliaries or intermediaries to get some services executed or to do it yourself. 4. Customs and warehousing You have to know procedures and customs formalities to make or to control yourself customs clearance. You have chosen the possibility of warehousing your stocks in warehouses (make enquiries before). 5. Other elements to master You have to adapt your packaging that is to say to choose it according to the product and its mean of transport. Without forgetting to create and to master the whole of documents. You have to create documents that prove your actions (commercial invoice, purchase order, etc.) in order to events take place in the best way. To finish, you have to master all the means of payment in order to be sure to be paid as a seller or to receive your merchandise as a buyer.

1. To make a commercial offer (or a call for tenders) and to be able to use the Incoterms

You have to master the run risks as soon as you have begun an international sale or purchase. You have also to use the incoterms to ensure a good freight. The Incoterms define responsibilities and obligations of a seller and a buyer in the framework of international commercial contracts.

2. To understand the importance of logistics and to adopt a strategy

Do not uderestimate the importance of each component of logistics to have a negotiation power with your partners. Then, thanks to these information, establish a logistic plan with the best proportion cost/efficiency to ensure a good freight of goods.

3. Master of transport operations

You have to be familiar with different means of transport and to choose the most appropriate one for the carried merchandise and its destination.
In addition to that, you have to anticipate damages and possible disputes about the chosen mean to avoid discontents from customers. You have to insure yourself against different transport risks in order to be completely compensated for potential damages.

You also have to be familiar with costs of transport auxiliaries or intermediaries to get some services executed or to do it yourself.

4. Customs and warehousing

You have to know procedures and customs formalities to make or to control yourself customs clearance. You have chosen the possibility of warehousing your stocks in warehouses (make enquiries before).

5. Other elements to master

You have to adapt your packaging that is to say to choose it according to the product and its mean of transport.

Without forgetting to create and to master the whole of documents. You have to create documents that prove your actions (commercial invoice, purchase order, etc.) in order to events take place in the best way.

To finish, you have to master all the means of payment in order to be sure to be paid as a seller or to receive your merchandise as a buyer.

Source : www.sourcing-en-chine.com

Export-oriented industrialization

2008-04-01T02:59:00.000-07:00

Export-oriented industrialization (EOI) is a trade and economic policy which aims to accelerate the process of industrialisation of a country through exporting products for which the country has a comparative advantage. The growth based on exports implies the opening of domestic markets to foreign competition in return for market access in other countries. Reduced tariff barriers, floating exchange rate (devaluation of the national currency is often used to facilitate exports), and support the government to export all fields are an example of policies adopted to promote EOI and ultimately economic development. Export-oriented industrialization was particularly characteristic of the development of national economies of the Asian Tigers: Hong Kong, South Korea, Taiwan and Singapore in the post Second World War period. The purpose of international institutions such as the World Trade Organization, work in favour of such strategies in promoting multilateral trade policy rules of each nation to put on the same playing field.

It 'been largely successful, although it may be sensitive to the market. Economic Crisis of 1998 hurt the economies of countries that have used export-oriented industrialization. It is criticized for its lack of diversity of the product, making it potentially unstable economies.

Export-oriented industrialization is often at odds with the import substitution industrialization. It 'grew as a reaction import substitution.

Joint Ventures: The #1 Business Start-Up Plan!

2008-02-21T21:04:00.001-08:00

Starting up a business can seem like a daunting task. There's so much to think about, not least how you're going to finance your operation and generate revenue in the shortest amount of time possible.

Of course, there are many resources available, both in the online world and offline world, to help you succeed. Some are free, others are not. Out of the free resources that are at the disposal of business start-ups one of the most potent - yet frequently overlooked - are joint ventures.

Joint Ventures

Joint ventures are the key to business success. You can start with nothing and create a multi-million dollar business solely through the creation of business collaborations from which you can profit. All it takes is a little determination and the right approach…but what is the right approach?

The answer to that is simple: Look for companies that have a natural powerful synergy with yours!

Say you are starting up an online travel agency. You have the web site and you have the vacation deals, but how are you going to reach your target customers? The key is to look for other businesses in the travel industry whose customers could benefit from your product. By doing so you'll gain instant access to primed customers for no money down!

Airlines for instance will have a database of clients who travel. In exchange for offering say a discounted vacation package to airline customers, where the airline shares in the profits made from a sale of a vacation package to their customers, you could gain a customer database of several thousand people overnight! Similar joint ventures could be forged with car hire firms, hotels and even other travel web sites. The possibilities are endless!

Finding joint venture partners

Joint venture partners are easily found by registering your company details with a joint venture matching service like www.jvbase.com . These types of companies specialize in finding joint venture partners who have that natural powerful synergy. Of course, your business is not legally bound in any way to the companies that the matching service present to you. It just makes the search process for joint venture partners that little bit easier!

Five Tips to Obtain Credit for Small Businesses

2008-02-20T02:30:00.000-08:00

As many small business owners know, financing is crucial to the financial health of their enterprise. While some small business owners have the resources to launch their business, most look to the credit market for financial help. Indeed, the banking industry is an important source to gain necessary capital. However, many entrepreneurs may not realize that that applying for commercial credit requires a great deal of preparation. Here are five tips to assist entrepreneurs in improving their chances of getting credit approval.

Tip #1: Decide on the type of commercial loan that is needed. Loan options include short-term loans, intermediate loans, long-term loans, and lines of credit.

Short-term loans are usually for less than a year. They typically provide interim working capital for a business temporarily in need of cash.

Intermediate loans are often used for business set-up, the purchase of new equipment, expansion, or an increase in working capital. This loan can be anywhere from 1-3 years.

Long-term loans are for major capital improvements, acquiring fixed assists, and business start-ups. The loan term is usually from 3-5 years and repayment installments are on a monthly or quarterly basis.

A line of credit gives a small business the ability to borrow money repeatedly, up to the credit limit. The lender will usually perform a review once a year, at which time the borrower is asked to update financial statements.

Tip #2: Make sure all paper work is in order. Applying for commercial loans can be very tedious and requires much more documentation than applying for consumer credit. So, the key is to be prepared. In addition, entrepreneurs who have carefully put together the needed paperwork to include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal will be viewed more favorably by many lenders.

Tip #3: Develop a well thought out proposal. The proposal should include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal. Points to include are the business description that tells the nature of the business, product and service, a personal profile, and a business plan that outlines the corporate strategy for the next three to five years. Additional points to add are supporting documentation that supports the information outlined in the proposal, and collateral that will be used to secure the loan. Financial statements, both personal and for the business, are important as well.

Tip #4: Seek advice! It is important for entrepreneurs to talk with someone who has gone through the process of obtaining commercial credit before a lender is approached. This is especially important for the first time buyer. Entrepreneurs can approach mentors, qualified business counselors, business support groups, and the U.S. Small Business Administration. This step will increase the chances of getting a favorable credit decision.

Tip #5: Be prepared to pursue various options. Sometimes, financial institutions will say no. Once again, obtaining credit can be difficult, especially for entrepreneurs who are first-time borrowers. However, since financial institutions have different standards, an inability to meet the standard of one lender does not mean one fails the standards of all. It is highly possible that credit approvals can be gained with another lender. So, it is important to keep seeking until a lender is found.

Obtaining credit is necessary for many small businesses. Knowing what steps to take in this process can greatly increase an approval from a financial institution. Now, put these five tips into practice and be on your way to getting the credit you need for your business venture.

Don’t Let Passions Rule When Buying A Business

2008-02-08T21:15:00.001-08:00

For many, the American dream of owning a business is in queue right behind owning a home. I was a teenager when I owned my first business. Since then I have bought or started many businesses and helped others do the same. Here are some common mistakes I have witnessed or committed myself.

Paying too much

This results from the combination of all other mistakes. Many new business owners set themselves up for failure by paying too much, which results in higher loan payments, lower operating funds, and reduced borrowing capacity.

Letting your emotions rule

If you have always dreamed of owning a business, it is very easy to get caught up in the strong emotions invoked by seeing those dreams coming true. To counteract your emotions, take your time, do your homework, and enlist the help of objective advisors.

Paying for potential

You should only pay for the business as it stands at the date of purchase, not what it could be in the future. You will have to spend time, effort, and money to develop its potential. The seller chose not to invest these things, so he does not deserve to be paid for them.

Not evaluating yourself

Do you have what it takes to run this business? Try to match your strengths to the important duties you will be required to perform. Running a small business requires the owner to do many things. No one can be good at them all, so make provisions for those areas in which you are the weakest. Some tasks like payroll and bookkeeping can easily be contracted to outside vendors. Possibly your spouse, other family member, or a partner could do things that you cannot or do not want to do.

Not building a team of experts

At a bare minimum, you should enlist the aid of an attorney and a CPA. The attorney can prepare and review documents, help structure the deal, and make you aware of legal and liability issues. The CPA can provide a financial analysis of the business, and advise you about tax and accounting matters. You should consider adding a business valuation professional. His valuation report can be used to determine the reasonableness of the asking price, negotiate a lower price, and provide valuable information about the business, the industry, the competition, and the economic conditions.

Relying on bad information

You should verify all important information about the business. Your CPA can check financial information like receivables, payables, and inventory. Your attorney can review loan documents, leases, and contracts. Your business valuation professional can analyze the competition, the industry, and the economic conditions. Use independent appraisers to value real estate and equipment. Get a credit report on the business through your CPA or banker. You can do some of the investigating yourself to save money, but do not cut too many corners – it may cost you in the long run.

Changing too much, too fast

Once you own the business, you will be tempted to start making wholesale changes from day one. You risk alienating long-time employees and customers. Unless the business is in bad financial condition and needs immediate action, its better to take some time to get to know the business, your employees, and your customers before making changes. This is a perfect time to solicit suggestions from employees and customers.

Buying a business because you like to do what the business does

One reason restaurants have a high failure rate is people buy or start them because they like to cook. Very few restaurant owners spend time cooking. Their time is spent managing staff, ordering supplies, doing paperwork, and handling daily crises. A small business owner must wear many hats – including that of manager.

Not being interested in the business’s product or service

I made the mistake of thinking that because I am a CPA and smart that I could own and operate any business. I bought a business that sold high-performance auto parts to young men who drove jacked-up, four-wheel drive pickup trucks and went to the drag races every weekend. I did not do either and never understood why anyone would. I could not relate to my customers and went out of business in about a year.

Conclusion

Buying a business is a complicated, emotional process. By avoiding these costly mistakes, you can prevent turning your dream into a nightmare.

Who Are Your Customers?

2008-01-14T20:06:00.000-08:00

Any manufacturer, supplier, crafter, artisan, importer, exporter or retailer is fair game. You can go after companies that deal in heavy construction equipment or delicate jewelry, gourmet goodies or pet food, telecommunications or toys. The only essential requirement is that they want to sell their merchandise or buy someone else's.

This doesn't mean, however, that your best technique is standing at manufacturers' gates, tripping them as they walk to their cars after work each evening. Targeting by definition means homing in on a specific group.

If you have previous experience in a particular field, for example, you should seriously consider targeting that market first. You'll feel comfortable with the jargon and procedures so your sales pitch--and your initial sales--will go smoother and easier. As an added bonus, you may already have contacts in the field who can either become your first clients or steer you to colleagues in that area.

Dan S. targeted the field of technology--specifically, software solutions for commercial use and computer cables--simply because he's worked in that area for more than 10 years. He knows the field and feels comfortable in it.

Wahib W., too, began in a field he knew well, runway and navigational lights, then went on to other international construction projects, importing railroad and telephone pole materials and construction services, as well as other heavy-equipment materials.

The Trade Hit Parade

2008-01-14T20:04:00.001-08:00

According to the U.S. Census Bureau, the top 10 countries with which America trades (in order of largest import and export dollars to smallest) are:

Canada
Mexico
Japan
China
Germany
United Kingdom
France
Republic of Korea (South Korea)
Taiwan
Singapore

You needn't, of course, confine yourself to trade deals with importers and exporters in these countries--there are scads of other intriguing possibilities available, including the member countries of the Caribbean Basin and Andean pacts and the new kids on the Eastern Bloc, the former Soviet Union countries. But as a newbie on the international scene, you should familiarize yourself with our biggest trading partners and see what they have to offer. Then take your best shot, with them or with another country

The Right Stuff

2008-01-14T20:03:00.001-08:00