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Exportkenya Exportkenya Presentation Transcript

  • Export Kenya Exporting to the USA Job Dieleman International Trade Center/SBDC University of Georgia Athens, GA, USA [email_address] 706/542-6661
  • Agenda
    • Overview US market and trends
    • Export readiness
    • American business culture
    • Researching the US market
    • Importing into the US
    • IP Protection
    • Other things to know
  • Why do business with the USA?
    • world’s largest economy (US$ 10 trillion)
    • 293 million people - $38,000 GNP/person
    • relatively homogeneous population/culture
    • relatively open economy
    • consumer/market driven
    • single regulatory system
    • English speaking
  • But the US is also the most competitive market in the world!! US buyers/consumers have a choice from the best and most (price)competitive products and services from anywhere in the world
  • GLOBALIZATION What is it?
  • What are the trends?
    • Reduced barriers to trade
    • Increased transparency through advanced information technology
    • Increased competition
    • Very competitive pricing!
    • Large US retailers going direct
    • Consolidation
  • US Apparel Retailers
    • Walmart
    • Lord & Taylor
    • The Gap
    • Target
    • J. Crew
    • Ann Taylor
    • Abercrombie & Fitch
    • Eddie Bauer
    • J.C. Penney
    • 30 retailers account for over 95% of US apparel sales in publicly held retail outlets
    • Average US family of four spent $1831 on apparel in 1999 (per capita all retail spending was $8,542 in 2003)
  • How do they compete?
    • Pricing
    • Outsourcing
    • Branding
    • Differentiation
    • Rapidly changing styles/colors
    • Lean and efficient supply chains
    • Sales through the internet
    • Retailers are selling globally
  • US Crafts/Gifts Retailers
    • TJ Max
    • Pier 1 Imports
    • Ross
    • Target
    • Ten Thousand Villages
    • Hobby Lobby
    • Grand Harbour
  • Why should you be global?
    • Global companies:
      • are less likely to fail
      • are more profitable
      • pay higher wages and benefits
      • create more jobs
  • Do you have a choice? You can no longer totally rely on the Kenya market, because Kenya is increasingly becoming an export market for the rest of the world!
  • Are you export ready? Self Assessment
  • Are you ready to tackle the US market?
    • Are you a successful company?
      • Exported regionally or to other parts of the world?
      • Solid track record in Kenya?
      • Are you financially healthy?
      • Does your business’s profitability compare favorably with others in your industry?
  • Are you ready to tackle the US market?
    • Is your product/service competitive?
      • Is your quality consistently high?
      • Are you ready to compete with foreign products in terms of quality?
      • Are you ready to compete with foreign products in terms of cost?
  • Are you ready to tackle the US market?
    • Are you committed?
      • Is top management committed?
      • Do you have a strong management team in place?
      • Can you focus on long-term goals?
      • Are you comfortable taking new risks to grow your business?
      • Are you willing to adapt your product to regulatory /cultural requirements of the US market?
  • Are you ready to tackle the US market?
    • Are you willing to increase production capacity to meet US demand?
    • Do you have somebody with overall responsibility for the US market?
    • Can this person adapt to the US business culture?
  • Are you ready to tackle the US market?
    • Do you have a local support structure in Kenya ?
      • International bank
      • Freight forwarders
      • International lawyer
      • Government (EPC, Ministry Industry & Trade)
      • Other Exporters
  • What is it like to do business with Americans? Iceberg Concept
  • Values Comparison Kenya-US Time…….………..…….…Relationship Individualism……....Group Orientation Equality……………..……….Hierarchy Competition…….……..…..Cooperation Change……….…......Stability/Tradition Control……….……..……………...Fate Directness…….………..…..Indirectness Future……………..………………..Past Informality…………..…….....Formality
  • Quotes from: AMERICANS at WORK A Guide to the Can-Do People Craig Storti 2004 www.interculturalpress.com
  • Understanding US Culture
      • “Americans have no doubt that if they want something bad enough and if they are willing to work hard enough, there is nothing they cannot achieve”:
        • nothing is impossible!
        • you control your own destiny!
        • self reliant!
        • focused on the future!
  • Understanding US Culture
    • “Americans have an unshakable belief that they will prevail regardless of circumstances, and that somehow everything will work out”
      • Americans are upbeat and optimistic
      • Americans are risk takers … and accept mistakes
  • Understanding US Culture
    • Americans have a strong drive to achieve
      • “Americans derive self respect and the respect from others in large part from their accomplishments”
      • It is important to show accomplishments- “If it ain’t broke, fix it anyway”.
      • Money is an important measurement of achievement.
      • Americans like to compete to win!
      • Americans are obsessed with efficiency!
      • Americans are focussed on getting things done (results).
  • Understanding US Culture
    • American communication:
      • Americans are direct talkers/candid
      • High and low context societies
      • Impatience with details- Get to the point!
      • Need just enough information to make a decision
  • What does this mean to you in a practical sense?
  • Doing Business with Americans
    • A positive attitude:
      • “Always sound positive”
      • “Be enthusiastic about solving problems”
      • “Don’t worry about making mistakes”
      • “Never suggest giving up”
      • “Focus on results and getting things done”
      • “Never complain or make excuses”
      • “Don’t act worried about taking risks”
  • Doing Business with Americans
    • Communication:
      • Always respond to e-mails within 1-2 days
      • Return phone calls within a day
      • Get to the point quickly!
      • Present practical information (examples, illustrations - no theories or abstract concepts)
  • Meeting with Americans
    • Set up appointments well in advance
    • Confirm appointments the day before
    • Do not arrive at an office unannounced
    • Get people’s attention right away!
    • Don’t overrun your allotted time - ending it early is ok
  • Meeting with Americans
    • Make sure you are prepared:
      • Market research
      • Professional presentation: business cards/brochures/website
      • CIF pricing in US $ currency for different quantities
      • Delivery lead times (production, shipping)
      • Production capabilities (modifications, packaging, sizing, etc.)
      • Samples
  • Meeting with Americans
      • Payment terms
      • After-sale service, warranties
      • Performance test results (if applicable)
      • Convert metric to US specs
      • Know the import regulations
  • Meeting with Americans
    • Prices are negotiable
    • Involve lawyer to check any significant contracts reached
    • Make sure you clarify what you understand to have taken place at the meeting/ confirm by e-mail right after meeting
    • Fast and comprehensive follow-up is essential
    • Promised delivery dates and production quantities must be honored.
  • Marketing in the USA
    • Do not promise what you cannot deliver. Inform of problems as early as possible and suggest solutions.
    • Think segmentation:
      • regions
      • ethnic groups:African/American, Hispanics, Asians
      • demographic groups/ lifestyle
      • niche markets
    Am I your target?
  • Marketing in the USA
    • Sending letters only has limited effectiveness/ Object is to meet face to face.
    • Safety and quality standards:
      • some of the most stringent standards and regulations in the world
      • US consumers are used to choosing from the best and cheapest products in the world
    • Pricing:
      • severe price competition for most products and services
  • Marketing in the USA
    • US has many layers of government:
      • federal, state, county, city
    • Maintenance and after-sale service:
      • consumers expect excellent maintenance and service of products
      • law imposes that products work as advertised and intended
    • A litigious society:
      • more lawyers and suits than any other country
      • be careful for product related lawsuits
  • Marketing in the USA
    • A legalistic society:
      • sales contracts
      • distributor agreements
  • What do you need to know? What’s the US market like? Can you compete? What is it going to take? What are the barriers?
  • Can you compete?
    • Competition : companies, products, prices
    • Existing distribution channels
    • Sales terms : delivery, service, payment, warranties
    • Regulatory compliance : labeling, standards, packaging, liability, etc.
  • Are you price competitive? What are the costs that need to be considered?
  • Cost Factors
    • Int’l promotion
    • Inland Kenya freight
    • Ocean/air freight
    • Marine/air insurance
    • Export preparation
      • modification
      • packaging/labeling
    • Forwarder fees
    • Regulatory compliance: standards, testing, inspection
    • US Import duties
    • Distribution channel markups
    • Bank, legal fees
    • Transaction financing
    • Exchange rate
  • Costing worksheet Calculate cost of your product from Kenya to USA retailer
  • Sources of Information:
    • Armchair approach
      • Export/import stats:
        • www.strategis.ic.gc.ca - Trade Data Online
      • Internet: broad search
        • Apparel Search- Online Guide (www.apparelsearch.com/associations.htm
        • Plunkett’s Apparel & Textile Industry Almanac (www.plunkettresearch.com/apparel)
        • Lexis/Nexis, Gale Research
        • Fashion Industry Info (www.infomat.com)
      • US Industry Associations:
        • American Apparel and Footwear Assoc.
        • Aid to Artisans (www.aidtoartisans.org)
        • Gift Association of America (www.giftassn.org)
        • National Association of Gift and Collectible Retailers (www.naled.org)
      • Industry Magazines:
        • The Craft Report (www.craftsreport.com)
        • Apparel Magazine (www.bobbin.com/buyersguide)
      • Local Kenya support structure : private/government
      • Other exporters to US (complimentary products sold to same industry)
      • Suppliers, customers
      • Network! Be creative!
      • Company info:
        • Dun &Bradstreet (www.dnb.com/us/)
        • Hoover’s Online (http://premium.hoovers.com)
        • InfoUSA (www.infoUSA.com)
        • Thomas Register (www.thomasnet.com)
        • Yellow Pages (www.yellowpages.com)
        • Switchboard (www.switchboard.com)
      • Look at their websites!
  • Travel Approach
    • If your armchair research indicates that you may be competitive, then visit the US market:
      • Select and attend/exhibit at a US trade show
      • Participate in trade mission/matchmaker program
      • Find potential US partners who are well established in your industry!
      • Visit and survey US retailers
  • Partners
    • Indirect sales
    • Direct sales
    • Agent/rep
    • Distributor
    • Licensing
    • Joint venture/subsidiary
    • Profit?
    • Credit risk?
    • Control price?
    • Promotion?
    • Sales volume?
    • Risk/commitment?
  • Importing into the USA WWW.CUSTOMS.GOV WWW.AGOA.GOV
  • WWW/CUSTOMS/GOV/XP/CGOV/TOOLBOX/PUBLICATIONS Click on: Importing into the United States - A Guide for Commercial Importers
  • Duty Assessment
    • Step 1: Identify Schedule B Harmonized Classification number (10 digits):
      • www.census.gov/scheduleb
        • Complete description of goods
        • Method of manufacture
        • Specifications and analyses
        • Quantities, weights
  • Duty Assessment
    • Step 2: Find duty rate in US Harmonized Tariff Schedule
      • www.customs.gov, click on “importing”, click on “Harmonized Tariff Schedule”
      • Special Tariff Treatment- in the Special column
        • System of Preferences: A, A*, A+
        • AGOA: D
      • AGOA Textile Certificate of Origin
      • Duty is only payable on product value
  • Duty Assessment
    • Apparel: HTS Chapter 98
    • Crafts:
      • Up to 20 Different HTS Chapters
        • What are they made of?
        • What is the function?
  • AGOA
    • AGOA expands benefits already available under the GSP program to a broader range of products
      • 1835 products will have symbol “D” inserted in the “Rates of Duty 1- Special” column. Qualify if product is growth, product or manufacture of:
        • a beneficiary sub-Saharan country
        • imported directly from one of these countries
        • meets a value-added requirement
        • is not import-sensitive
  • AGOA Preferential Treatment for Certain Textile and Apparel Articles
    • Six broad categories
      • see AGOA Textile Certificate of Origin
    • Questions?
      • Customs Textile Team 404/675-1310
      • Informed-compliance publication www.customs.gov
      • African Growth and Opportunity Act Implementation Guide (www.agoa.gov)
      • Office African Affairs, Washington (tel. 202/395-9514, fax. 202/395-4505)
      • US Embassy in Nairobi
  • Regulatory Issues
    • Quotas are gone! (Jan 1, 2005)
    • Country of origin marking
    • Textile products labeling:
      • generic names and % by weight of fibers
      • manufacturer/identification # /trademark
      • country of origin
    • Products subject to regulations by various other US agencies
  • Customs Invoice Requirements
    • The invoice is the most important import document. It must provide:
      • Port of entry
      • Names and place of buyer and seller
      • Quantities in weights and volumes
      • Purchase price of each item in the currency of the sale
      • Kind of currency
      • State all separate charges (itemized by name and amount) including freight, insurance, commission, cost of packing
      • Country of origin
  • Shipping to the US
    • Regular mail
      • all mail is examined by Customs
      • duty and fees paid by buyer upon delivery in US
    • Express mail
      • express company clears at customs (for a fee)
    • Freight shipments
      • Air/ocean
      • Freight forwarder
      • Informal/formal entry (over $2000)
  • Trademarks, Trade Names, Copyrights
    • US Customs checks for counterfeit trademarks or copyright infringements
      • parallel imports
      • subject to seizure
    • Provide US Customs with a certified copy of your certificate of registration issued by the US Patent and Trademark Office
  • Trademark, Trade Name Protection
    • US Patent and Trademark Office (www.uspto.gov)
    • Where to start? (www.uspto.gov/web/trademarks/workflow/start.htm)
      • Do a search (on-line)
      • Describe goods/services with which mark will be used
      • Clearly depict your mark
      • File trademark application (on-line)
  • Copyright Protection
    • Www.copyright.gov
    • Copyright is secured automatically when the work is created, but registration has definite advantages
    • Registration procedures on-line
  • Other things to know
    • INCO Terms (Int’l Commercial Terms)
    • Pro-forma invoicing
    • International payment options
  • INCO Terms
    • 13 INCO terms
    • Defines the responsibilities/risks/costs of buyer and seller
    • Use of INCO terms avoids confusion, delays and unnecessary risks
  • INCO Terms
  • Pro-Forma Invoice Formal price quotation
    • Identify all costs (develop costing sheet)
    • Learn about 13 INCO terms
    • Do it right! Pro-forma is used to:
      • draw up sales contract
      • request import license
      • draw up a Letter of Credit
  • Which Payment Term is best? Cash in Advance ? Open Account ? Cash against Documents ? Unconfirmed Letter of Credit ? Confirmed Letter of Credit ?
  • Exporting is not rocket science ! Plan and prepare ! Focus on marketing and strategy! Find a niche! Find a US partner ! Build a support team to advise you on the mechanics!
  • Questions?