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  • Exportkenya

    1. 1. Export Kenya Exporting to the USA Job Dieleman International Trade Center/SBDC University of Georgia Athens, GA, USA [email_address] 706/542-6661
    2. 2. Agenda <ul><li>Overview US market and trends </li></ul><ul><li>Export readiness </li></ul><ul><li>American business culture </li></ul><ul><li>Researching the US market </li></ul><ul><li>Importing into the US </li></ul><ul><li>IP Protection </li></ul><ul><li>Other things to know </li></ul>
    4. 4. Why do business with the USA? <ul><li>world’s largest economy (US$ 10 trillion) </li></ul><ul><li>293 million people - $38,000 GNP/person </li></ul><ul><li>relatively homogeneous population/culture </li></ul><ul><li>relatively open economy </li></ul><ul><li>consumer/market driven </li></ul><ul><li>single regulatory system </li></ul><ul><li>English speaking </li></ul>
    5. 5. 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
    6. 6. GLOBALIZATION What is it?
    7. 7. What are the trends? <ul><li>Reduced barriers to trade </li></ul><ul><li>Increased transparency through advanced information technology </li></ul><ul><li>Increased competition </li></ul><ul><li>Very competitive pricing! </li></ul><ul><li>Large US retailers going direct </li></ul><ul><li>Consolidation </li></ul>
    8. 8. US Apparel Retailers <ul><li>Walmart </li></ul><ul><li>Lord & Taylor </li></ul><ul><li>The Gap </li></ul><ul><li>Target </li></ul><ul><li>J. Crew </li></ul><ul><li>Ann Taylor </li></ul><ul><li>Abercrombie & Fitch </li></ul><ul><li>Eddie Bauer </li></ul><ul><li>J.C. Penney </li></ul><ul><li>30 retailers account for over 95% of US apparel sales in publicly held retail outlets </li></ul><ul><li>Average US family of four spent $1831 on apparel in 1999 (per capita all retail spending was $8,542 in 2003) </li></ul>
    9. 9. How do they compete? <ul><li>Pricing </li></ul><ul><li>Outsourcing </li></ul><ul><li>Branding </li></ul><ul><li>Differentiation </li></ul><ul><li>Rapidly changing styles/colors </li></ul><ul><li>Lean and efficient supply chains </li></ul><ul><li>Sales through the internet </li></ul><ul><li>Retailers are selling globally </li></ul>
    10. 10. US Crafts/Gifts Retailers <ul><li>TJ Max </li></ul><ul><li>Pier 1 Imports </li></ul><ul><li>Ross </li></ul><ul><li>Target </li></ul><ul><li>Ten Thousand Villages </li></ul><ul><li>Hobby Lobby </li></ul><ul><li>Grand Harbour </li></ul>
    11. 11. Why should you be global? <ul><li>Global companies: </li></ul><ul><ul><li>are less likely to fail </li></ul></ul><ul><ul><li>are more profitable </li></ul></ul><ul><ul><li>pay higher wages and benefits </li></ul></ul><ul><ul><li>create more jobs </li></ul></ul>
    12. 12. 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!
    14. 14. Are you export ready? Self Assessment
    15. 15. Are you ready to tackle the US market? <ul><li>Are you a successful company? </li></ul><ul><ul><li>Exported regionally or to other parts of the world? </li></ul></ul><ul><ul><li>Solid track record in Kenya? </li></ul></ul><ul><ul><li>Are you financially healthy? </li></ul></ul><ul><ul><li>Does your business’s profitability compare favorably with others in your industry? </li></ul></ul>
    16. 16. Are you ready to tackle the US market? <ul><li>Is your product/service competitive? </li></ul><ul><ul><li>Is your quality consistently high? </li></ul></ul><ul><ul><li>Are you ready to compete with foreign products in terms of quality? </li></ul></ul><ul><ul><li>Are you ready to compete with foreign products in terms of cost? </li></ul></ul>
    17. 17. Are you ready to tackle the US market? <ul><li>Are you committed? </li></ul><ul><ul><li>Is top management committed? </li></ul></ul><ul><ul><li>Do you have a strong management team in place? </li></ul></ul><ul><ul><li>Can you focus on long-term goals? </li></ul></ul><ul><ul><li>Are you comfortable taking new risks to grow your business? </li></ul></ul><ul><ul><li>Are you willing to adapt your product to regulatory /cultural requirements of the US market? </li></ul></ul>
    18. 18. Are you ready to tackle the US market? <ul><li>Are you willing to increase production capacity to meet US demand? </li></ul><ul><li>Do you have somebody with overall responsibility for the US market? </li></ul><ul><li>Can this person adapt to the US business culture? </li></ul>
    19. 19. Are you ready to tackle the US market? <ul><li>Do you have a local support structure in Kenya ? </li></ul><ul><ul><li>International bank </li></ul></ul><ul><ul><li>Freight forwarders </li></ul></ul><ul><ul><li>International lawyer </li></ul></ul><ul><ul><li>Government (EPC, Ministry Industry & Trade) </li></ul></ul><ul><ul><li>Other Exporters </li></ul></ul>
    21. 21. What is it like to do business with Americans? Iceberg Concept
    22. 22. Values Comparison Kenya-US Time…….………..…….…Relationship Individualism……....Group Orientation Equality……………..……….Hierarchy Competition…….……..…..Cooperation Change……….…......Stability/Tradition Control……….……..……………...Fate Directness…….………..…..Indirectness Future……………..………………..Past Informality…………..…….....Formality
    23. 23. Quotes from: AMERICANS at WORK A Guide to the Can-Do People Craig Storti 2004 www.interculturalpress.com
    24. 24. Understanding US Culture <ul><ul><li>“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”: </li></ul></ul><ul><ul><ul><li>nothing is impossible! </li></ul></ul></ul><ul><ul><ul><li>you control your own destiny! </li></ul></ul></ul><ul><ul><ul><li>self reliant! </li></ul></ul></ul><ul><ul><ul><li>focused on the future! </li></ul></ul></ul>
    25. 25. Understanding US Culture <ul><li>“Americans have an unshakable belief that they will prevail regardless of circumstances, and that somehow everything will work out” </li></ul><ul><ul><li>Americans are upbeat and optimistic </li></ul></ul><ul><ul><li>Americans are risk takers … and accept mistakes </li></ul></ul>
    26. 26. Understanding US Culture <ul><li>Americans have a strong drive to achieve </li></ul><ul><ul><li>“Americans derive self respect and the respect from others in large part from their accomplishments” </li></ul></ul><ul><ul><li>It is important to show accomplishments- “If it ain’t broke, fix it anyway”. </li></ul></ul><ul><ul><li>Money is an important measurement of achievement. </li></ul></ul><ul><ul><li>Americans like to compete to win! </li></ul></ul><ul><ul><li>Americans are obsessed with efficiency! </li></ul></ul><ul><ul><li>Americans are focussed on getting things done (results). </li></ul></ul>
    27. 27. Understanding US Culture <ul><li>American communication: </li></ul><ul><ul><li>Americans are direct talkers/candid </li></ul></ul><ul><ul><li>High and low context societies </li></ul></ul><ul><ul><li>Impatience with details- Get to the point! </li></ul></ul><ul><ul><li>Need just enough information to make a decision </li></ul></ul>
    28. 28. What does this mean to you in a practical sense?
    29. 29. Doing Business with Americans <ul><li>A positive attitude: </li></ul><ul><ul><li>“Always sound positive” </li></ul></ul><ul><ul><li>“Be enthusiastic about solving problems” </li></ul></ul><ul><ul><li>“Don’t worry about making mistakes” </li></ul></ul><ul><ul><li>“Never suggest giving up” </li></ul></ul><ul><ul><li>“Focus on results and getting things done” </li></ul></ul><ul><ul><li>“Never complain or make excuses” </li></ul></ul><ul><ul><li>“Don’t act worried about taking risks” </li></ul></ul>
    30. 30. Doing Business with Americans <ul><li>Communication: </li></ul><ul><ul><li>Always respond to e-mails within 1-2 days </li></ul></ul><ul><ul><li>Return phone calls within a day </li></ul></ul><ul><ul><li>Get to the point quickly! </li></ul></ul><ul><ul><li>Present practical information (examples, illustrations - no theories or abstract concepts) </li></ul></ul>
    31. 31. Meeting with Americans <ul><li>Set up appointments well in advance </li></ul><ul><li>Confirm appointments the day before </li></ul><ul><li>Do not arrive at an office unannounced </li></ul><ul><li>Get people’s attention right away! </li></ul><ul><li>Don’t overrun your allotted time - ending it early is ok </li></ul>
    32. 32. Meeting with Americans <ul><li>Make sure you are prepared: </li></ul><ul><ul><li>Market research </li></ul></ul><ul><ul><li>Professional presentation: business cards/brochures/website </li></ul></ul><ul><ul><li>CIF pricing in US $ currency for different quantities </li></ul></ul><ul><ul><li>Delivery lead times (production, shipping) </li></ul></ul><ul><ul><li>Production capabilities (modifications, packaging, sizing, etc.) </li></ul></ul><ul><ul><li>Samples </li></ul></ul>
    33. 33. Meeting with Americans <ul><ul><li>Payment terms </li></ul></ul><ul><ul><li>After-sale service, warranties </li></ul></ul><ul><ul><li>Performance test results (if applicable) </li></ul></ul><ul><ul><li>Convert metric to US specs </li></ul></ul><ul><ul><li>Know the import regulations </li></ul></ul>
    34. 34. Meeting with Americans <ul><li>Prices are negotiable </li></ul><ul><li>Involve lawyer to check any significant contracts reached </li></ul><ul><li>Make sure you clarify what you understand to have taken place at the meeting/ confirm by e-mail right after meeting </li></ul><ul><li>Fast and comprehensive follow-up is essential </li></ul><ul><li>Promised delivery dates and production quantities must be honored. </li></ul>
    35. 35. Marketing in the USA <ul><li>Do not promise what you cannot deliver. Inform of problems as early as possible and suggest solutions. </li></ul>
    36. 36. <ul><li>Think segmentation: </li></ul><ul><ul><li>regions </li></ul></ul><ul><ul><li>ethnic groups:African/American, Hispanics, Asians </li></ul></ul><ul><ul><li>demographic groups/ lifestyle </li></ul></ul><ul><ul><li>niche markets </li></ul></ul>Am I your target?
    37. 37. Marketing in the USA <ul><li>Sending letters only has limited effectiveness/ Object is to meet face to face. </li></ul><ul><li>Safety and quality standards: </li></ul><ul><ul><li>some of the most stringent standards and regulations in the world </li></ul></ul><ul><ul><li>US consumers are used to choosing from the best and cheapest products in the world </li></ul></ul><ul><li>Pricing: </li></ul><ul><ul><li>severe price competition for most products and services </li></ul></ul>
    38. 38. Marketing in the USA <ul><li>US has many layers of government: </li></ul><ul><ul><li>federal, state, county, city </li></ul></ul><ul><li>Maintenance and after-sale service: </li></ul><ul><ul><li>consumers expect excellent maintenance and service of products </li></ul></ul><ul><ul><li>law imposes that products work as advertised and intended </li></ul></ul><ul><li>A litigious society: </li></ul><ul><ul><li>more lawyers and suits than any other country </li></ul></ul><ul><ul><li>be careful for product related lawsuits </li></ul></ul>
    39. 39. Marketing in the USA <ul><li>A legalistic society: </li></ul><ul><ul><li>sales contracts </li></ul></ul><ul><ul><li>distributor agreements </li></ul></ul>
    41. 41. 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?
    42. 42. Can you compete? <ul><li>Competition : companies, products, prices </li></ul><ul><li>Existing distribution channels </li></ul><ul><li>Sales terms : delivery, service, payment, warranties </li></ul><ul><li>Regulatory compliance : labeling, standards, packaging, liability, etc. </li></ul>
    43. 43. Are you price competitive? What are the costs that need to be considered?
    44. 44. Cost Factors <ul><li>Int’l promotion </li></ul><ul><li>Inland Kenya freight </li></ul><ul><li>Ocean/air freight </li></ul><ul><li>Marine/air insurance </li></ul><ul><li>Export preparation </li></ul><ul><ul><li>modification </li></ul></ul><ul><ul><li>packaging/labeling </li></ul></ul><ul><li>Forwarder fees </li></ul><ul><li>Regulatory compliance: standards, testing, inspection </li></ul><ul><li>US Import duties </li></ul><ul><li>Distribution channel markups </li></ul><ul><li>Bank, legal fees </li></ul><ul><li>Transaction financing </li></ul><ul><li>Exchange rate </li></ul>
    45. 45. Costing worksheet Calculate cost of your product from Kenya to USA retailer
    46. 46. Sources of Information: <ul><li>Armchair approach </li></ul><ul><ul><li>Export/import stats: </li></ul></ul><ul><ul><ul><li>www.strategis.ic.gc.ca - Trade Data Online </li></ul></ul></ul><ul><ul><li>Internet: broad search </li></ul></ul><ul><ul><ul><li>Apparel Search- Online Guide (www.apparelsearch.com/associations.htm </li></ul></ul></ul><ul><ul><ul><li>Plunkett’s Apparel & Textile Industry Almanac (www.plunkettresearch.com/apparel) </li></ul></ul></ul><ul><ul><ul><li>Lexis/Nexis, Gale Research </li></ul></ul></ul><ul><ul><ul><li>Fashion Industry Info (www.infomat.com) </li></ul></ul></ul>
    47. 47. <ul><ul><li>US Industry Associations: </li></ul></ul><ul><ul><ul><li>American Apparel and Footwear Assoc. </li></ul></ul></ul><ul><ul><ul><li>Aid to Artisans (www.aidtoartisans.org) </li></ul></ul></ul><ul><ul><ul><li>Gift Association of America (www.giftassn.org) </li></ul></ul></ul><ul><ul><ul><li>National Association of Gift and Collectible Retailers (www.naled.org) </li></ul></ul></ul>
    48. 48. <ul><ul><li>Industry Magazines: </li></ul></ul><ul><ul><ul><li>The Craft Report (www.craftsreport.com) </li></ul></ul></ul><ul><ul><ul><li>Apparel Magazine (www.bobbin.com/buyersguide) </li></ul></ul></ul><ul><ul><li>Local Kenya support structure : private/government </li></ul></ul><ul><ul><li>Other exporters to US (complimentary products sold to same industry) </li></ul></ul><ul><ul><li>Suppliers, customers </li></ul></ul><ul><ul><li>Network! Be creative! </li></ul></ul>
    49. 49. <ul><ul><li>Company info: </li></ul></ul><ul><ul><ul><li>Dun &Bradstreet (www.dnb.com/us/) </li></ul></ul></ul><ul><ul><ul><li>Hoover’s Online (http://premium.hoovers.com) </li></ul></ul></ul><ul><ul><ul><li>InfoUSA (www.infoUSA.com) </li></ul></ul></ul><ul><ul><ul><li>Thomas Register (www.thomasnet.com) </li></ul></ul></ul><ul><ul><ul><li>Yellow Pages (www.yellowpages.com) </li></ul></ul></ul><ul><ul><ul><li>Switchboard (www.switchboard.com) </li></ul></ul></ul><ul><ul><li>Look at their websites! </li></ul></ul>
    50. 50. Travel Approach <ul><li>If your armchair research indicates that you may be competitive, then visit the US market: </li></ul><ul><ul><li>Select and attend/exhibit at a US trade show </li></ul></ul><ul><ul><li>Participate in trade mission/matchmaker program </li></ul></ul><ul><ul><li>Find potential US partners who are well established in your industry! </li></ul></ul><ul><ul><li>Visit and survey US retailers </li></ul></ul>
    51. 51. Partners <ul><li>Indirect sales </li></ul><ul><li>Direct sales </li></ul><ul><li>Agent/rep </li></ul><ul><li>Distributor </li></ul><ul><li>Licensing </li></ul><ul><li>Joint venture/subsidiary </li></ul><ul><li>Profit? </li></ul><ul><li>Credit risk? </li></ul><ul><li>Control price? </li></ul><ul><li>Promotion? </li></ul><ul><li>Sales volume? </li></ul><ul><li>Risk/commitment? </li></ul>
    52. 52. Importing into the USA WWW.CUSTOMS.GOV WWW.AGOA.GOV
    53. 53. WWW/CUSTOMS/GOV/XP/CGOV/TOOLBOX/PUBLICATIONS Click on: Importing into the United States - A Guide for Commercial Importers
    54. 55. Duty Assessment <ul><li>Step 1: Identify Schedule B Harmonized Classification number (10 digits): </li></ul><ul><ul><li>www.census.gov/scheduleb </li></ul></ul><ul><ul><ul><li>Complete description of goods </li></ul></ul></ul><ul><ul><ul><li>Method of manufacture </li></ul></ul></ul><ul><ul><ul><li>Specifications and analyses </li></ul></ul></ul><ul><ul><ul><li>Quantities, weights </li></ul></ul></ul>
    55. 56. Duty Assessment <ul><li>Step 2: Find duty rate in US Harmonized Tariff Schedule </li></ul><ul><ul><li>www.customs.gov, click on “importing”, click on “Harmonized Tariff Schedule” </li></ul></ul><ul><ul><li>Special Tariff Treatment- in the Special column </li></ul></ul><ul><ul><ul><li>System of Preferences: A, A*, A+ </li></ul></ul></ul><ul><ul><ul><li>AGOA: D </li></ul></ul></ul><ul><ul><li>AGOA Textile Certificate of Origin </li></ul></ul><ul><ul><li>Duty is only payable on product value </li></ul></ul>
    56. 57. Duty Assessment <ul><li>Apparel: HTS Chapter 98 </li></ul><ul><li>Crafts: </li></ul><ul><ul><li>Up to 20 Different HTS Chapters </li></ul></ul><ul><ul><ul><li>What are they made of? </li></ul></ul></ul><ul><ul><ul><li>What is the function? </li></ul></ul></ul>
    57. 60. AGOA <ul><li>AGOA expands benefits already available under the GSP program to a broader range of products </li></ul><ul><ul><li>1835 products will have symbol “D” inserted in the “Rates of Duty 1- Special” column. Qualify if product is growth, product or manufacture of: </li></ul></ul><ul><ul><ul><li>a beneficiary sub-Saharan country </li></ul></ul></ul><ul><ul><ul><li>imported directly from one of these countries </li></ul></ul></ul><ul><ul><ul><li>meets a value-added requirement </li></ul></ul></ul><ul><ul><ul><li>is not import-sensitive </li></ul></ul></ul>
    58. 61. AGOA Preferential Treatment for Certain Textile and Apparel Articles <ul><li>Six broad categories </li></ul><ul><ul><li>see AGOA Textile Certificate of Origin </li></ul></ul><ul><li>Questions? </li></ul><ul><ul><li>Customs Textile Team 404/675-1310 </li></ul></ul><ul><ul><li>Informed-compliance publication www.customs.gov </li></ul></ul><ul><ul><li>African Growth and Opportunity Act Implementation Guide (www.agoa.gov) </li></ul></ul><ul><ul><li>Office African Affairs, Washington (tel. 202/395-9514, fax. 202/395-4505) </li></ul></ul><ul><ul><li>US Embassy in Nairobi </li></ul></ul>
    59. 62. Regulatory Issues <ul><li>Quotas are gone! (Jan 1, 2005) </li></ul><ul><li>Country of origin marking </li></ul><ul><li>Textile products labeling: </li></ul><ul><ul><li>generic names and % by weight of fibers </li></ul></ul><ul><ul><li>manufacturer/identification # /trademark </li></ul></ul><ul><ul><li>country of origin </li></ul></ul><ul><li>Products subject to regulations by various other US agencies </li></ul>
    60. 63. Customs Invoice Requirements <ul><li>The invoice is the most important import document. It must provide: </li></ul><ul><ul><li>Port of entry </li></ul></ul><ul><ul><li>Names and place of buyer and seller </li></ul></ul><ul><ul><li>Quantities in weights and volumes </li></ul></ul><ul><ul><li>Purchase price of each item in the currency of the sale </li></ul></ul><ul><ul><li>Kind of currency </li></ul></ul>
    61. 64. <ul><ul><li>State all separate charges (itemized by name and amount) including freight, insurance, commission, cost of packing </li></ul></ul><ul><ul><li>Country of origin </li></ul></ul>
    62. 65. Shipping to the US <ul><li>Regular mail </li></ul><ul><ul><li>all mail is examined by Customs </li></ul></ul><ul><ul><li>duty and fees paid by buyer upon delivery in US </li></ul></ul><ul><li>Express mail </li></ul><ul><ul><li>express company clears at customs (for a fee) </li></ul></ul><ul><li>Freight shipments </li></ul><ul><ul><li>Air/ocean </li></ul></ul><ul><ul><li>Freight forwarder </li></ul></ul><ul><ul><li>Informal/formal entry (over $2000) </li></ul></ul>
    63. 66. Trademarks, Trade Names, Copyrights <ul><li>US Customs checks for counterfeit trademarks or copyright infringements </li></ul><ul><ul><li>parallel imports </li></ul></ul><ul><ul><li>subject to seizure </li></ul></ul><ul><li>Provide US Customs with a certified copy of your certificate of registration issued by the US Patent and Trademark Office </li></ul>
    64. 67. Trademark, Trade Name Protection <ul><li>US Patent and Trademark Office (www.uspto.gov) </li></ul><ul><li>Where to start? (www.uspto.gov/web/trademarks/workflow/start.htm) </li></ul><ul><ul><li>Do a search (on-line) </li></ul></ul><ul><ul><li>Describe goods/services with which mark will be used </li></ul></ul><ul><ul><li>Clearly depict your mark </li></ul></ul><ul><ul><li>File trademark application (on-line) </li></ul></ul>
    65. 68. Copyright Protection <ul><li>Www.copyright.gov </li></ul><ul><li>Copyright is secured automatically when the work is created, but registration has definite advantages </li></ul><ul><li>Registration procedures on-line </li></ul>
    66. 69. Other things to know <ul><li>INCO Terms (Int’l Commercial Terms) </li></ul><ul><li>Pro-forma invoicing </li></ul><ul><li>International payment options </li></ul>
    67. 70. INCO Terms <ul><li>13 INCO terms </li></ul><ul><li>Defines the responsibilities/risks/costs of buyer and seller </li></ul><ul><li>Use of INCO terms avoids confusion, delays and unnecessary risks </li></ul>
    68. 71. INCO Terms
    69. 72. Pro-Forma Invoice Formal price quotation <ul><li>Identify all costs (develop costing sheet) </li></ul><ul><li>Learn about 13 INCO terms </li></ul><ul><li>Do it right! Pro-forma is used to: </li></ul><ul><ul><li>draw up sales contract </li></ul></ul><ul><ul><li>request import license </li></ul></ul><ul><ul><li>draw up a Letter of Credit </li></ul></ul>
    70. 73. Which Payment Term is best? Cash in Advance ? Open Account ? Cash against Documents ? Unconfirmed Letter of Credit ? Confirmed Letter of Credit ?
    71. 74. 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!
    72. 75. Questions?