• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
EXPORTING GUIDE US Export Assistance Center
 

EXPORTING GUIDE US Export Assistance Center

on

  • 361 views

 

Statistics

Views

Total Views
361
Views on SlideShare
361
Embed Views
0

Actions

Likes
0
Downloads
5
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Lets address another aspect of selling a product. There are at least 5 methods to take a product or service to market; Direct sales, through distributors, joint ventures, purchasing companies and licensing. May I offer some observations on their uses?
  • Lets reflect more closely on the selection of distributors. When all of this is said and considered, the same 4 criteria would be used for any of the 5 methods of going to market
  • Lets reflect more closely on the selection of distributors. When all of this is said and considered, the same 4 criteria would be used for any of the 5 methods of going to market
  • Lets reflect more closely on the selection of distributors. When all of this is said and considered, the same 4 criteria would be used for any of the 5 methods of going to market

EXPORTING GUIDE US Export Assistance Center EXPORTING GUIDE US Export Assistance Center Presentation Transcript

  • EXPORTING GUIDE US Export Assistance Center Southern Ohio District Export Council Compiled by Mark P. Evans August 2004
  • Exporting Overview
    • Market Potential
    • Company Resources
    • Marketing Plan
    • Distribution Methods
    • International Standards
    • International Legal Considerations
    • Shipping
    • Quotation
    • Pricing
    • Payment Terms
    • Customer Service
  • Market Potential
    • US Product Life Cycle vis a vis International Product Life Cycle
    • Uniqueness of your product
    • Competitive Position Outside the US
    • Ease of Substitution
    • Cultural Acceptance of your Brand/Product Name
  • Company Resources
    • Top Management Support
    • Relative Ease in Supporting Export Sales Activity by Sales, Marketing, Finance and Manufacturing
    • Will the personnel view exporting as a thorn or a rose?
    • Management Decision Making Style; Centralized or Decentralized and Impact Upon Negotiations
  • Marketing Plan
    • Select countries of interest
    • Research US export statistics of common commodities (NTDB)
    • Determine fastest growing markets for US exporters
    • Assess which of your US competitors are exporting and where
    • Internet research for competitive local products
  • Marketing Plan (continued)
    • Are product modifications needed?
    • What import technical barriers exist; CE mark, CCC, etc.
    • What price levels exist? Remember price in international markets is usually lower than US markets as price is more important than features, quality, service, etc. Your specific product may not require the lowest price if it has a distinct competitive advantage.
  • Sources of Market Information
    • US Government Export Portal www.export.gov
    • National Trade Data Bank (NTDB) www.stat-usa.gov
    • TRADESTAT www.ita.doc.gov/td/industry/otea/
    • UN Statistics Yearbook http://unstats.un.org/unsd/CIA
    • World Fact Book www.cia.gov/cia/publications/factbook/
  • General Industry Information
    • Culturgram www.culturegrams.com /
    • Country Commercial Guides www.export.gov/OneStopConsumer/OneStop/mrllogin.jsp
    • Trade Information Center www.ita.doc.gov/td/tic
  • US Government Resources
    • Trade Information Center (TIC) www.ita.doc.gov/td/tic
    • Export Assistance Center Cincinnati www.buyusa.gov/greatlakes/services.html
      • Gold Key Service; locate potential distribution and arrange local introductory appointments
      • Platinum Key Service; long term sustained assistance from overseas Commercial Service posts
  • Distribution Methods
    • Direct Sales
      • Highly engineered products
      • OEM sales
      • Key account sales
      • Currency fluctuations do not impact sales because of competitive advantage
      • Few competitors or highly concentrated industry
  • Distribution Methods (Continued)
    • Distributor Network
      • More important to have local representation where engineered competitive advantage does not exist
      • Local connections sell the product when barriers exist to direct selling
  • Distribution Methods (Continued)
    • Distributor Criteria
      • Must be sales people, not order takers.
      • Must be marketing/selling to your target market/customer now.
      • Must possess the capital base to advertise, promote, hold inventory and support their customers credit terms.
      • Must possess the infrastructure to run the business and have the experience to handle all import administration.
  • Distribution Methods (Continued)
    • Joint Venture
      • Local connections very important
      • Cost disadvantage to pure export
      • Retains some marketing and price/profit control
      • Extremely difficult to maintain “fair” relationships
      • Legal systems and conventions operate differently compared with the USA
  • Distribution Methods (Continued)
    • Foreign Direct Investment
      • Buy a company and the existing customers
      • Useful to buy a competitor or fend off additional competitors
      • Allows fragmentation/differentiation of markets to reduce risk of attack by competitors
      • Provides greater control of market, products, sales and profits
      • Does not eliminate management culture issues
  • Distribution Methods (Continued)
    • License
      • Useful when capital and management resources are limited.
      • Increases risk of creating a competitor as the licensee is out of sight and out of mind
      • May be important to include royalty and cross licensing provisions for any improvements
  • Distribution Methods – 4 Criteria EMPHASIZED
    • Must have sales people, not order takers.
    • Must have access to your target market/customer base immediately.
    • Must possess the capital base to advertise, promote, hold inventory and support your customers’ credit terms.
    • Must invest in the infrastructure to run the business and have the experience to handle all import administration.
  • Department of Commerce – US Commercial Service Resources
    • Market Research
      • Trade Information Center (TIC) www.ita.doc.gov/td/tic
      • Country Commercial Guides; market conditions, best export prospects, financing, finding distributors, legal and cultural issues
      • International Market Insights; analyze conditions in specific markets
      • Industry Sector Analysis; details about an industry to estimate market potential, market size and foreign competitors
      • Video Market Briefings; discuss market conditions, regulations, key players and competitors
      • Export Assistance Centers; 111 offices throughout the 50 US States
  • Department of Commerce – US Commercial Service Resources (continued)
    • Trade Events
      • Trade Missions; arrange personal meetings with pre-screened business partners
      • Int’l Buyer Program; brings foreign buyers to US Trade shows
      • Certified Trade Fairs; place you in the best international trade shows with targeted matching
      • Catalog Exhibitions; showcase your product and service and have leads sent back to you.
      • Single Company Promotions; provide meeting space and pre-screened invitations to help you successfully present product or service seminars
  • Department of Commerce – US Commercial Service Resources (continued)
    • International Partners
      • Export Assistance Center Cincinnati www.buyusa.gov/greatlakes/services.html
        • Platinum Key Service; long term sustained assistance from overseas Commercial Service Posts
        • Gold Key Service; arrange personal appointments with pre-screened business contacts at the US embassy of your designated country
      • BuyUSA.com; matches international buyers with US suppliers online
      • Virtual Trade Missions; let you explore promising markets via video conferencing
      • Int’l Partner Searches; deliver details on potential partners that have expressed interest in your product or service
      • Commercial News USA; promotes your product or service to more than 40,000 international buyers trough a free monthly catalog
  • Department of Commerce – US Commercial Service Resources (continued)
    • International Partners (continued)
      • Int’l Company Profiles; offers low cost quick credit checks and due diligence reports on buyers and distributors
      • The Trade Opportunity Program; provides daily trade leads from foreign buyers
  • Department of Commerce – US Commercial Service Resources (continued)
    • Consulting and Advocacy
      • Counseling; assists in the development of an export strategy and obtaining financing
      • Consulting; helps resolve regulatory hurdles and recover payment
      • Platinum Key Service; provides customized, long-term support to achieve your business goals
      • ShowTime; offers in-depth counseling at major trade shows from market and industry specialists
      • Multilateral Development Bank (MDB); representatives provide access to project opportunities funded by MDB’s worldwide
      • Advocacy; through US Diplomats and other officials to give you the edge.
  • Department of Commerce – US Commercial Service Resources (continued)
    • Where to start?
      • 1-800-USA-TRADE to find your local export assistance center
      • www.export.gov
      • www.buyUSA.com
  • International Standards
    • Product Adaptation; to meet foreign government regulations, buyer preferences, technological differences.
    • Engineering and Redesign;
      • voltage differences 120 vac vs 230 vac 1 phase,
      • 480 vac vs 400 vac 3 phase,
      • soft metric vs hard metric dimensions
      • sae vs metric fasteners
    • Branding, Labeling and Packaging;
      • are local or international brand names important to the customers and do you need trademark protection
      • does the name translate well in the foreign markets
      • are OSHA warning labels sufficient or do you need international warning labels
      • does the package need US or metric weights and dimensions
  • International Standards (continued)
    • Safety Standards; what local or country safety standards are required for the product to pass through customs
    • United States; UL label is required on electrical products, toys, medical devices, etc.
    • European Union; CE Mark is required an any product which can be used “as is”, otherwise a Declaration of Incorporation (DOI) is required so the buyer of the product can place the CE Mark on the final product.
    • CE Mark; is a safety analysis and documentation requirement (placed on the product by the manufacturer), unlike the UL label which is a performance specific regulation. The CE Mark is required for end use products, see the CE Directives.
  • International Legal Considerations
    • Export Administration Regulations
      • Small percentage of exports require a license or are prohibited for export to certain countries
      • First check the web site www.ustreas.gov/ofac which details prohibited countries based upon the type of product or service
      • Second, verify your product or service is not a “dual use” (military and commercial) which would require an export license. If the end use of the product is in a military or nuclear application, and export license is required
      • Review the restricted product list at the USDOC Bureau of Industry and Security http://www.bxa.doc.gov/licensing/exportingbasics.htm
  • International Legal Considerations (continued)
    • Export Administration Regulations
      • Third, it is the exporters responsibility to ensure the product is not diverted to prohibited countries. Severe penalties apply
      • Fourth, Foreign corporations which are more than 50% owned by a US company or are substantially directed in their daily activities by the US company, are subject to similar trade restrictions as the US parent
      • Get legal advice before allowing a foreign subsidiary to sell in a way that could not be done by a US parent
  • International Legal Considerations (continued)
    • Foreign Government Regulations
      • Consular Invoices
      • Certificates of Inspection
      • Health Certification
      • Certificates of Origin
      • Chamber of Commerce Verification
      • Safety Certification
  • International Legal Considerations (continued)
    • Customs Benefits for Exporters
      • Duty Drawback
      • NAFTA Reduced Local Import Duties Canada/Mexico
      • FTA’s Reduced Local Import Duties
        • Completed; Israel, Jordan, NAFTA, Chile, Singapore
        • Pending; Australia, CAFTA, Morocco, Dominican Republic
      • Foreign Sales Corporation (FSC); Exemption from Income Tax (Banned by WTO - to be modified by Congress)
  • International Legal Considerations (continued)
    • Intellectual Property Considerations
      • Patents;
        • US Patents based upon first to invent
        • International patents based upon first to file for a patent.
        • After initial filing you have one year to file in Paris treaty countries
        • In US you have one year to file after disclosure or sale of the product
        • International patents must apply before disclosure or sale of the technology otherwise the technology becomes part of the public domain, or within 1 year of the US patent application
  • International Legal Considerations (continued)
    • Intellectual Property Considerations
      • Trademarks;
        • US trademark or service mark based upon first to use or apply for foreign trademark/service mark protection
        • International trademark or service mark based upon first to apply
        • Some countries do not allow registration of service marks
        • MADRID PROTOCOL allows common application with individual country examinations
  • Shipping
    • General Requirements
      • Packed so it arrives in good condition
      • Labeled correctly to ensure the goods are handled properly, arrive on time and at the right place
      • Documented to meet US and foreign gov’t requirements and collection standards
      • Insured against damage, loss, pilferage and delay
    • Freight Forwarder’s role is to supply above
  • Shipping (continued)
    • Packing LCL and CL
      • Pack in strong containers adequately sealed and filled
      • Provide proper bracing and weight distribution
      • Goods should be palletized
      • Packing material moisture resistant
      • Wooden boxes for LCL shipments properly treated for insects
  • Shipping (continued)
    • Labeling
      • Shippers Mark
      • Country of Origin
      • Weight in pounds and kilograms
      • Number of cases and dimension of cases in inches and centimeters
      • Special handling marks (fragile, this side up, no hooks)
      • Port of Entry
      • Labels for hazardous materials
  • Shipping (continued)
    • Common Documentation
      • Airfreight shipments require non-negotiable air waybills
      • Bill of Lading; contract between owner of goods and carrier
      • Commercial Invoice; used by importing country customs officers (caution many customers will ask this value be reduced to reduce duties)
      • Consular Invoice; used by customs officials in some countries
  • Shipping (continued)
    • Common Documentation (continued)
      • Certificate of Origin; some countries require plus a stamp from the local chamber of commerce
      • NAFTA Certificate of Origin; required for trade between the NAFTA countries if a US shipper wants to claim 0% duty. (Ex. US company re-sell goods in Canada made in Japan 6 months earlier)
      • Inspection Certification; usually a third party inspection required by importing customer or government (Philippines)
  • Shipping (continued)
    • Common Documentation (continued)
      • Shippers Export Declaration (SED)
        • Required when shipping goods valued over $2500 through the US Postal Service
        • Required when shipping goods valued over $2500 under Schedule B
        • Prepared by freight forwarder and electronically filed with US Customs
        • Not required for exports to Canada unless export license required
  • Shipping (continued)
    • Common Documentation (continued)
      • Export License for controlled goods
      • Export Packing List is more detailed than a domestic packing list and requires;
        • Itemizes material in each package
        • Lists individual gross and net weights in English and Metric
        • Shippers and buyers references
      • Insurance Certificate to assure the consignee the goods are insured
  • Quotation
    • State the Seller and Buyer
    • Detail Price and Currency
    • Validity Period
    • Terms and Conditions Sheet
    • Warranty Period
    • Shipment terms per INCOTERMS 2000 (Ex-Works and CIF most common)
    • Ex-Works shipment schedules and estimated arrival schedule
    • Payment & Banking Details; Account #, Sort Code, Swift Code
    • Pro Forma Invoice typically required with quotation as a means for the customer to assure what they are buying
  • Pricing
    • Market Based Pricing
      • Requires accurate survey of market prices at your level in the value chain
    • Cost Based Pricing
      • Requires Calculation of direct costs through the value chain
      • Example:
    $ 14.48 $ 12.59 Final User Price $ 2.17 $ 1.89 Importer/Distributor Margin 15% $ 12.31 $ 0.55 Import duty 4.65% of landed cost $ 11.76 $ 0.56 Ocean Freight and Insurance $ 11.20 $ 0.50 Export Documentation $ 10.70 $ 10.70 $ 0.70 $ 0.70 Domestic Freight $ 10.00 $ 10.00 Factory Cost Unburdened Export Sale Domestic Sale
  • Payment Terms
    • Terms must be evaluated according to company and country credit risk. The Asian banking crisis of 1997 is a prime example of country risk.
    • Typical payment terms
      • Cash in advance: check, telegraphic transfer or credit card
      • Irrevocable confirmed letter of credit; at sight or x days after ocean bill of lading. A confirmed L/C is a guarantee by the exporter’s bank it will pay the exporter even if the buyer’s bank does not pay the exporter’s bank.
  • Payment Terms (continued)
      • Irrevocable confirmed letter of credit; mechanics
        • Buyer opens L/C at buyer’s bank including language for documents required from exporter to effect payment (we recommend sending preferred L/C language to buyer before the L/C is opened).
        • Buyer’s bank sends L/C via SWIFT to the advising/confirming bank in exporter’s country. SWIFT requires 3 days.
        • Exporter’s banks sends letter of confirmation and L/C to exporter.
        • Exporter reviews L/C carefully as all instructions must be carried out to the letter and all documentation must be provided without errors, or discrepancy fees will apply and payment may not occur.
  • Payment Terms (continued)
      • Irrevocable confirmed letter of credit; mechanics continued
        • Exporter contacts freight forwarder who schedules the ocean or air shipment, and prepares all documentation
        • Once the goods are loaded, the ocean or air bill of lading is completed by the freight forwarder.
        • Freight forwarder then sends bill of lading, commercial invoice, packing list, etc. to the advising/confirming bank in exporter’s country
        • Exporter’s bank reviews all documents for discrepancies, send the documents to the buyer’s bank, who sends documents to the buyer.
        • Buyer collects the goods.
        • Exporter collects payment according to payment terms at sight or time draft.
  • Payment Terms (continued)
      • Sight Draft: Mechanics
        • Ocean bill of lading endorsed by exporter
        • Exporter’s banks sends OBoL, sight draft, and other documents (packing list, commercial invoice, inspection certificate, insurance certificate) to buyer’s bank
        • Buyer’s bank notifies buyer of document arrival.
        • Buyer pays draft and buyer’s bank turns over ocean bill of lading to allow buyer to collect the goods.
        • Note: Do not ship via air under sight draft as goods can be collected without an airway bill of lading
      • Open Account is the most risky transaction, but is least expensive for both sides.
      • L/C is the most expensive as banking fees are incurred by both the exporter and the buyer.
  • Customer Service
    • Perhaps the most unanticipated and most important factor to succeeding in the international market.
    • Customer service can be described as the manner, procedure and timeliness with which communication is conducted. Some examples:
      • Send wrap up meeting notes within one business day of your return from abroad.
      • Meet all deadlines
      • Establish a communication policy for all personnel who will communicate with the customer, such as:
        • Send an answer to all inquiries and questions within 24 hours.
        • If an answer is not possible within 24 hours, send a schedule for answering the question within 24 hours.
        • Ensure the final answer is not delayed longer than 6 business days.
  • Customer Service (continued)
    • Why? Fast communication ensures you are easy to do business with, and helps ensure you become the preferred supplier.
  • Summary: Global Market Cycle 3. Customer Service 5. New Product Development Through Global Customer Input 4. Relationship Development 2. Pricing 1. Market Research
  • CONTACT INFORMATION
    • US Export Assistance Center
      • www.buyusa.gov/greatlakes
      • Dao Le - Director
      • Phone 513-684-2944
    • Southern Ohio District Export Council
      • www.exportsouthernohio.org
      • Dao Le – Executive Secretary
      • Phone 513-684-2944