Marie Hladikova

Massachusetts Small Business Development Center Network Massachusetts Export Center

Doing Business in Emerging Markets: China, India and Brazil
Marie Hladikova, Trade Services Manager
Massachusetts Export Center

Importance of Exporting for the Economy
The U.S. Depends on Exports for Economic Growth and Job Creation
Exports support 12 million U.S. jobs
Exporting firms experience 20% faster employment growth than non-exporting firms
Exporting firms pay 15-17% more than non-exporting firms
In 2006, exports represented 11% of the U.S. GDP
Exports help to reduce the trade deficit and offset negative influences on the economy

Importance of Exporting in Massachusetts
In 2009, Massachusetts exported over $23.5 Billion in goods and ranked as the 13 th highest exporting state.
In 2008, Massachusetts ranked 4 th nationally in high tech exports.
Massachusetts also ranks 4 th nationally for the percentage of manufacturing workers that depend on exports for their jobs, at 29 percent.
A total of 8,335 companies exported goods from Massachusetts in 2006.
Of those, 7,422 (or 89 percent) were small and medium-sized enterprises (SMEs), with fewer than 500 employees.
SMEs generated 28 percent of Massachusetts’ total merchandise exports in 2006.

Importance of Exporting for Your Business
Exporting facilitates long-term growth in sales, profit and market share
Exporting improves competitiveness and diversifies risk
95% of the world’s population and 2/3 of its purchasing power lie outside of the U.S.
The failure rate for exporting firms is one-third less than the rate for non-exporting firms
Sales per employee are 150% higher at exporting firms
The recent signing of over 20 Free Trade Agreements has given U.S. exporters unprecedented access to many international markets
The weak dollar has made U.S. products highly competitive and sought-after in export markets

US Exports - 2009

MA Exports - 2009 Description ANNUAL 2009 %2008- 2009 TOTAL ALL PARTNER COUNTRIES 23,574,691,740.00 -16.9 1 United Kingdom 4,049,330,994.00 15.56 2 Canada 3,057,861,899.00 -21.74 3 Netherlands 1,982,739,402.00 -25.88 4 Germany 1,748,190,587.00 -29.77 5 Japan 1,714,055,312.00 -29.39 6 China (Mainland) 1,372,028,564.00 -12.23 7 Mexico 901,224,724.00 -22.5 8 France 670,924,545.00 -28.95 9 Korea, Republic Of 625,276,068.00 -6.06 10 China (Taiwan) 619,289,502.00 -12.69 11 Hong Kong 524,968,973.00 -11.09 12 Italy 496,076,984.00 -14.48 13 Switzerland 362,462,539.00 -18.8 14 Singapore 357,949,067.00 -24.18 15 Malaysia 340,377,720.00 -9.09 16 Ireland 339,205,626.00 -38.25 17 Belgium 316,016,874.00 -4.47 18 Brazil 310,331,103.00 -19.35 19 India 306,247,179.00 -21.75 20 Australia 277,061,616.00 -11.98

MA Exports to Brazil

MA Exports to China

MA Exports to India

Common Challenges Faced by Exporters
Finding the Right Partners in Export Markets
Export Regulatory Compliance
AES, Paperwork and Customs Compliance
Managing International Credit Risk
Access to Capital for Export Operations

International Market Assessment & Development

Export Readiness Assessment
Export Commitment
Export Motivations
Export Potential
Resources
Product
Capacity

Assessing Potential Export Markets
Indicators of Potential International Markets :
Reactive:
U.S. Customers Moving Into Export Markets
Inquiries From Potential Overseas Customers and Distributors
Interest Expressed by Overseas Visitors to US Trade Shows
Following Competitors
Proactive:
International Market Research
Strategic Approach
Limit Pool of Potential Target Markets

Identifying International Sales & Marketing Partners
Government Market Research Reports
Internet
Trade Shows (Attending & Exhibiting)
Trade Missions
Trade Associations & Journals
State & Federal Govt Overseas Offices
Companies With Complementary Products
End Users in the Target Export Market

Best Prospects for US Exports- Brazil
Aerospace: Aircraft and Parts/ Airports
Electrical Power Systems
Environmental
Franchising
Information & Computer Technology
Insurance
Medical Equipment
Mining
Oil and Gas
Pharmaceuticals
Safety and Security
Transportation (Ports / Railways)
Travel and Tourism

Best Prospects for US Exports – China
Automotive Components Market
Cleaner Coal
Construction Equipment Market
Education and Training
Machine Tools
Marine Industries
Healthcare Market
Water and Wastewater Treatment
Rail Equipment
Renewable Energy
Green Building

Best Prospects for US Exports – India
Airport and Ground Handling
Computers
Education Services
Electric Power Generation, Distribution and Transmission Equipment
Food Processing & Cold Storage Equipment
Franchising and Retailing
Medical Equipment
Mining and Mineral Processing Equipment
Oil and Gas Field Machinery
Pollution Control Equipment
Telecommunications Equipment
Textile Machinery
Water

Authorities Governing Exports
Export Controls are Largely Outlined in 3 Sets of Regulations :
Export Administration Regulations (EAR)
International Traffic in Arms Regulations (ITAR)
Office of Foreign Assets Control (OFAC)
Authorities Governing Exports:
U.S. Department of Commerce (EAR)
Bureau of Industry & Security
U.S. Department of State (ITAR)
Directorate of Defense Trade Controls
U.S. Treasury (OFAC)
Office of Foreign Assets Control
U.S. Department of Energy
U.S. Customs (enforcement of controls)
Immigration & Customs Enforcement (ICE)

Web Sites for Export Regulatory Authorities
U.S. Department of Commerce, Bureau of Industry & Security
www.bis.doc.gov
U.S. Department of Treasury, Office of Foreign Assets Control
www.treas.gov/ofac
U.S. Department of State, Directorate of Defense Trade Controls
www.pmdtc.org

Areas of Control
Avoiding Denied Parties
Avoiding Embargoed Countries
Product Controls and Classification
Anti-Boycott Compliance
Deemed Exports

Validated End User Program China & India
Companies approved for VEU will:
Receive shipments of designated U.S. controlled goods on an expedited basis. After receiving an order from a VEU authorized firm for a VEU approved item, any U.S. exporter can immediately ship that item without having to first navigate the individual licensing process.
Have more certainty and reliability in receiving U.S.-controlled items that are included in their VEU authorization. If an item is included in a company’s VEU authorization, there is no uncertainty about whether an individual license application will be approved.
http://www.bis.doc.gov/validated_enduser.pdf

Export Logistics

Product Classifications in Global Trade
Export Control Classifications
e.g., ECCNs
Harmonized Tariff Schedule (HTS) Codes
Export Product Classifications
e.g., Schedule B numbers in the U.S.

Harmonized Tariff Schedule (HTS) Codes
Harmonized Commodity Description and Coding System is used by over 180 countries worldwide.
Assigns 10-digit codes to identify products as they are imported and exported.
The system provides for uniformity worldwide in classification of products through the first 6 digits of the provision.
Provides only for uniformity in tariff provision/classification, not duty rates.
HTS codes must be reported to foreign customs official at the time of import (typically reported on the Commercial Invoice)
Harmonized Tariff Schedule of the U.S. provides product classification and rates of duty for U.S. imports .

Tariff Rate Database
International Customs Tariff Bureau:
The International Customs Tariff Bureau (BITD), established by The Convention of July 5, 1890, which created the International Union for the Publication of Customs Tariffs, translates and publishes customs tariffs
http://www.bitd.org/Search.aspx

Schedule B Codes http://www.census.gov/foreign-trade/schedules/b/
Administered by U.S. Census Bureau
10-Digit Product Classification Code for U.S. exports
Difference Between Schedule B and HTS Codes
Reported via the Automated Export System (AES)
Used primarily for statistical tracking purposes

Export Documentation & Customs Clearance

Brazil Commonly Required Documents
Commercial Invoice
Bill of Lading/Airway Bill
Certificate of Origin (recommended)
Packing List
Customs Import Declaration
Technical Standard/Health Certificate
All importers must be registered with the Foreign Trade Secretariat of Ministry of Industry, Commerce and Tourism (SECEX). Import licenses are typically required in Brazil.

China Commonly Required Documents
Commercial Invoice
Certificate of Origin
Packing List

India Commonly Required Documents
Commercial Invoice
Certificate of Origin
Inspection Report
Packing List
Technical Standard/Health Certificate

Other Common Export Documents
Pro Forma Invoice
Dock Receipt
Customs Power of
Attorney

International Payment & Financing

Methods of International Payment
Cash in Advance
Open Account
Documentary Collections
Letter of Credit

Trade Finance & Risk Management Tools
Export Credit Insurance
Foreign Exchange Hedging Tools
Foreign Credit Reporting Resources
Export Financing Programs

Export Assistance Resources

Massachusetts Export Center
www.mass.gov/export

Our Mission
The Massachusetts Export Center is part of the Massachusetts Small Business Development Center Network.
Our mission is to help companies throughout the Commonwealth achieve success in global markets, thereby contributing to economic growth in the state. Our goal is to meet the complex needs of exporters by developing and providing targeted, high-impact services delivered through a state-wide network of international trade professionals.

Office Locations Holyoke New Bedford Amherst Worcester Boston

Providing Assistance Through the Entire Export Process
Export Market Assessment
International Business Development
Export Legal & Regulatory Compliance
Export Logistics & Supply Chain Management
International Payment & Financing
Counseling · Technical Assistance · Market Research & Promotion · Training

Export Counseling & Technical Assistance
Assessment of export readiness & export planning
Export strategy and international business plan development
Export market assessment & selection
International sales, marketing & distribution channel development/management
Overseas trade show identification and facilitation
Mechanics of exporting (classification, payment, financing, documentation, shipping & logistics)

NAFTA First
Provide assistance in the areas of market development and logistics management for clients selling to Canada and/or Mexico (and shipping under other FTAs)
Tariff/product classification assistance
Origin determination assistance
NAFTA eligibility assistance
NAFTA documentation assistance
Market research and partner searches
In-house training and seminars on NAFTA issues

Export Regulatory Compliance Assistance Program
An enhanced assistance program to help clients comply with U.S. export regulations
Counseling & technical assistance on U.S. export regulations
ECCN classification guidance
Export license determination assistance
Assistance in establishing an Export Management & Compliance Program
In-house training and seminars on export controls and compliance
Targeted referrals to government authorities responsible for export controls

International Market Research & Publications
Develop customized research to help clients assess overseas markets and partners
Distributor/sales agent searches
Export market analyses
Demographic, economic, political information
Statistical analysis of export activity
Product/industry analysis in target market
Other key contacts (competitors, manufacturers, end-users, trade associations, government agencies, etc.) in target market
E-Newsletter – International Trade Reporter
Publications

Spring 2010 Training
International Networking Evening & Business Forum
TSA Certified Cargo Screening Program
Export Finance Roundtable
Deemed Export Compliance
Export Documentation and Valuation
Essentials of Export Controls: Lessons Learned for Compliance
Antiboycott Compliance
Certified Global Business Professional Series
Export Classification & Shipping Under FTAs
Export Licensing Under ITAR

Compliance Alliance
Provides a forum for exporting firms to network, share best practices
and stay current on export regulatory compliance issues.
Networking Briefings
Conferences & Training
Online Member Directory
Online Resources & Databank
Online Job Board

2008 Economic Impact
Clients reported nearly $190 Million in export sales as a direct result of the assistance provided by the Mass Export Center in 2008
Overall, companies assisted by the Export Center generated well over $1.5 Billion in export sales in 2008.
Between 2007 and 2008, Export Center clients increased their export sales by 39% – more than triple the growth rate of 11% for Massachusetts’ export performance during the same time period.
98% of clients found the services of the Massachusetts Export Center to be beneficial and 68% indicated that the Export Center’s services exceeded their expectations
The Export Center’s impact translates to over 3,000 new/retained jobs in Massachusetts (based on the Commerce Department’s exports-to-jobs formula).

Mass Export Center Wins 2 National Awards in 2008
U.S. Small Business Administration’s Small Business Development Center (SBDC) Service Center Excellence and Innovation Award
Honors SBDCs for their innovation and excellence in assisting small businesses -- there are over 1,000 SBDCs in the U.S., and the Massachusetts Export Center was the nation-wide winner of this award
Presidential ‘E’ Award for Export Achievement
The highest honor the federal government can give to American people, firms or organizations that have made significant contributions to the increase of American exports – presented by President George W. Bush and U.S. Secretary of Commerce Carlos Gutierrez

Other Export Assistance Resources

U.S. Department of Commerce
Market Research & Data
www.export.gov
http://tse.export.gov/
International Market Promotion
International Partner Search
Gold Key Service
Trade Missions & Shows
MA Office of Int’l Trade & Investment
www.mass.gov/moiti
Overseas Offices
Brazil, China, Germany, Mexico
Selected Overseas Industry Trade Shows
U.S. Customs & Border Protection
www.customs.gov
U.S. import requirements & regulations
Assessment of duty on U.S. imports

Export Financing Resources
U.S. Small Business Administration
www.sba.gov
Export-Import Bank of the U.S.
www.exim.gov
MassDevelopment
www.massdevelopment.com

Massachusetts Small Business Development Center Network Massachusetts Export Center
www.mass.gov/export
617-973-8664

Marie Hladikova

by Enterprise Center at Salem State University on Apr 01, 2010

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