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THE BASICS OF GOING GLOBAL

WHY IS EXPORTING IMPORTANT?

• Health of the United States Economy– export dependence of the U.S. economy– job creation

• Competition for Markets

• Business Growth at the Individual Level– leads to larger profits

• Advances in communication, travel, and freight deliveries have made exporting a less daunting task.

ASSESSING THE EXPORT READINESS

OF A COMPANY• Does the company:– Have a product that has been successfully sold in the domestic

market?– Have or plan to develop an international marketing plan with

defined goals and strategies?– Have sufficient production capacity that can be committed to the

export market?– Have the financial resources to actively support the marketing of

its products in the targeted overseas markets?– Have a commitment to developing export markets and is your

company willing and able to dedicate staff, time and resources to the process?

ASSESSING YOUR EXPORT READINESS...

• Does your company:– Have a commitment to provide the same level of service to international

customers as that given to domestic customers?

– Have adequate knowledge in modifying product packaging, ingredients, specifications, etc. to meet foreign import regulations, standards, and cultural preferences?

– Have adequate knowledge in shipping products overseas, such as identifying and selecting international freight forwarders, temperature management, freight costing, and documentation?

– Have adequate knowledge of export payment mechanisms, such as developing and negotiating letters of credit?

APPROACHES TO EXPORTING

• Indirect ExportingIndirect Exporting– Passively filling orders from domestic buyers who then export

the product.

– Seeking out domestic buyers who represent foreign end users or customers.

– Exporting indirectly through intermediaries.

• Piggybacking– an arrangement whereby one company uses the established

distribution channels of another company.

– Usually effective when the two companies sell complementary products

APPROACHES TO EXPORTING...

• Foreign Ownership– licenses and franchises

• for the protection of patents, trade secrets, or trademarks

– wholly owned subsidiaries• may become an option once a firm has established a

significant market presence

– overseas manufacturing and joint ventures• most major U.S. food processing firms have evolved to this

• State Trading

DIRECT EXPORTING

• Process by which your company takes majority control of the export process.

• This may lead to potentially higher profits, and a closer relationship with the overseas buyers and marketplace.

• It is necessary to devote resources to the process such as time, personnel money.

DIRECT EXPORTING

• WHAT IS INVOLVED?– Market Research

– Making Contacts

– Cultural Analysis

– Distribution

– Shipping

– Getting Paid

MARKET RESEARCH

• This is an essential step in the plan of an exporter at any level of experience.

• It involves the identification of market opportunities as well as constraints.

• It includes all methods a company uses to determine which foreign markets have the best potential for its products.

WHAT YOU SHOULD EXPECT TO LEARN FROM MARKET RESEARCH

• The best markets for your product– Largest and fastest growing

• Market trends and outlook• Market conditions and practices• The structure of the distribution system(s) for a

particular product• Possible barriers

– Tariff and non-tariff

– Regulations– Culture and language

MARKET RESEARCH….WHERE DO I START?

• Obtain export statistics

• Identify 5 to 10 promising markets for your firm’s products (How is this done?)

• Identify small but emerging markets

• Target three to five of the most statistically promising markets

SOURCES OF TRADE INFORMATION

• Trade Leads

• Trade fairs/Shows

• Missions

• Delegations

• Personal Contacts

SOURCES OF MARKET RESEARCH PROVIDED BY THE “CENTER”

• The National Trade Data Bank (NTDB) available online at http://www.stat-usa.gov/stat-usa.html with the ff:

– the latest census data on exports by commodity and country

– current market reports

– trade leads

– country commercial guides

• The Exporter’s Encyclopedia• The Bureau of National Affair’s International Trade

Reporter• The World Factbook

OTHER SOURCES OF MARKET RESEARCH ONLINE

– Southern United States Trade Association http://www.susta.org/export/index.html

– USDA/Foreign Agricultural Service http://www.fas.usda.gov

– U.S. Department of Commerce - International Trade Administration http://www.ita.doc.gov/cs/index.asp

– The Federation of International Trade Association http://fita.org/trade_info.html

– Export.Gov http://www.export.gov/

MAKING CONTACTS

• Purpose:

– to find potential buyers and/or distributors for you product(s) or service(s).

– to find specific export opportunities.

HOW TO MAKE CONTACTS

• Foreign Agricultural Service– Trade leads

– Buyer Alert Announcements

– Foreign Buyer List

– Agricultural Attaches

• Department of Commerce– Trade Leads (Trade Opportunity Program - NTDB)

– Agent/Distributor Service

– The U.S. Commercial Service/ Commercial Attaches

CROSS-CULTURAL ANALYSIS

• Cultural understanding is essential to operate effectively in the global marketplace.

• International Marketing presents differences in customs, behavior, and values from country to country.

CULTURAL CHARACTERISTICS

• Sense of Self and Space

• Communication and Language

• Dress and Appearance

• Food and Feeding Habits

• Time and Consequences

• Relationships

• Mental Process and Learning

• Norms

• Values

• Beliefs and Attitudes

• Work and Work Habits

DEVELOPING CULTURAL SENSITIVITY

• Be Culturally Prepared

• Learn Local Communication Complexities

• Mix with Host Nationals

• Be Creative and Experimental

• Be Culturally Sensitive

• Recognize Complexities in Host Culture

• Perceive Yourself as a Culture Bearer

• Be Patient, Understanding, and Accepting of Self and Hosts

• Be Realistic in Expectations

• Accept the Challenge of Intercultural ExperienceInternational Marketing for Agribusiness - Concepts and Applications, 12/2000

SKILLS FOR EFFECTIVE MULTICULTURAL COMMUNICATION

• R-E-S-P-E-C-T

• Tolerating Ambiguity

• Relating to People

• Being Non-Judgmental

• Do Not Personalize Your Own Observations

• Empathy

• Persistence

International Marketing for Agribusiness - Concepts and Applications, 12/2000

EXPORT DOCUMENTATION & SHIPPING

• When preparing to ship a product, the exporter needs to be aware of packing, labeling, documentation, and insurance requirements.

• The exporter also must be sure to follow all shipping requirements to help ensure that the merchandise is:– packed correctly so that it arrives in good condition

– labeled correctly to ensure that the goods are handled properly and arrive on time and at the right place

– documented correctly to meet U.S. and foreign government requirements as well as proper collection standards

– insured against damage, loss, and pilferage and, in some cases, delay

– Most exporters rely on international freight forwarders to perform these services

(U.S. Department of Commerce)

DOCUMENTATION

• Commercial Invoice• Bill of Lading• Consular Invoice• Certificate of Origin• Inspection Certificate• Dock Receipt and

Warehouse Receipt

• Destination Control Statement

• Insurance Certificate• Shipper’s Export

Documentation• Export License• Export Packing List

The following documents are commonly used in exporting; which of them are actually used in each case depends on the requirements of both the U.S. government and the government of the importing country.

DOCUMENTATION

• Export documents must be precise. Even the slightest discrepancy, inconsistency or omission may prevent U.S. merchandise from being exported, result in U.S. firms not getting paid, or even result in the seizure of the exporter’s goods by U.S. or foreign government customs.

• Collection documents are subject to precise time limits and may not be honored by a bank if out of date.

• For these reasons, the exporter may want to seriously consider having a freight forwarder handle the completion of the documentation.

SHIPPING• The international shipping process is similar to the domestic

shipping process; however:-

– Export marks, the name of the carrier, and the latest arrival date at the port of export should be shown on the bill of lading. Also, the exporter should instruct the inland carrier to notify the international freight forwarder by telephone that the goods have reached the port.

– It may be advantageous and convenient for the exporter to consult with a freight forwarder when determining the method of shipment.

– Shipping Alternatives are, Land, Rail, Air or Ocean

SHIPPING CONSIDERATIONS

• As the exporter, you should consider:– the cost of the shipment

– the carriers’ delivery schedule

– accessibility to the shipped product by the foreign buyer

– the destination of the goods if a free trade zone or free port for the exemption of import duties is a concern

GETTING PAID

• Methods of Payment

– Cash in Advance

– Documentary letters of credit and Drafts

– Credit Cards

– Open Account