Posts Tagged ‘Doing Business Internationally’
How To: Import Products From Japan
Monday, September 29th, 2008
When it comes to business and the market, many Americans operate under the illusion that the same rules apply to imports from other countries as apply within America itself; namely, grow your business and realize the American dream.
However, all business owners, and particularly those who are importing, have to remember that while the aspirations of the individual are important (if not central in an oblique way) to the well being of the United States, they do not come before the well being of the nation as a whole.
The Pearl of the Orient
So why is this important in an article that discusses imports in Japan? Well, when it comes to the important products being sold today, Japan has us beat in many areas.
Not only that, but the United States and Japan have always had a tense relationship when it comes to trade, largely due to protectionist feelings on the side of the States and isolationist feelings on the side of the Japanese.
This means that import issues and regulations for products from Japan are convoluted in the extreme, and most often have to be looked at on an item by item basis.
So what exactly are the main items that are imported from Japan to the United States? Well, a top three list yields up cars, electronics, and pharmaceuticals in that order.
Other important imports - ones that businesses are built around - include semi-conductors and petro chemicals.
For the individual American businessperson, it is the first three that are likely going to be the targets of your business, so let’s take a quick look as best we can into some of the procedures and customs you are likely to encounter when you are looking to import from Japan.
• Always be polite. One of the biggest mistakes that American entrepreneurs make when dealing with business partners, particularly those in the Far East, is neglecting manners.
Japanese business means you don’t let your feelings show - and that is the most important rule there is.
• Be prepared to pay. Unfortunately for the individual entrepreneur, those cheap prices on all manner of great Japanese products don’t stay so cheap once they are in your hand.
The reason? Those tense trade relations we were talking about. The top three imports from Japan are all areas in which the States would like to take a lead, so in order to combat a flooding of the US market with Japanese goods there are some pretty high tariffs.
You can expect that price to skyrocket once you get it into the States, and you will have to build around that in the retail value.
• Approach business like business! A really big mistake that a lot of foreign importers make with Japanese companies is not treating them like American companies.
It’s hard not to get wrapped up in our perception of Japanese culture, but you have to remember that business is business all over the world - and you can’t take honesty for granted from anyone!
It is also important that, if you are importing anything from Japan, that you keep in touch with current events on the US/Japan trade front.
There are almost continuous court cases being brought up between governments and businesses in regards to Japan/American trade, any one of which could affect you and your business.
Most people find it much easier to go through a middle company, one which can act as a broker; again, this is really only feasible if you are planning on retailing high end goods.
Tags: customs, Doing Business Internationally, how to, import, importing products, international business, japan, products, tips
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Expanding Globally? Here’s Some Food For Thought…
Friday, May 16th, 2008
Going global is a huge step. It’s an important one in every business’s growth. Considering the fact that times are what they are, it could mean the survival of your business. So before you step off into the global market, consider the following factors Entrepreneur.com has put together as a sort of "Pre-Going-Global-Checklist":
- Get company-wide commitment.
- Define your business plan for accessing global markets.
- Determine how much you can afford to invest in your international expansion efforts.
- Plan at least a two-year lead-time for world market penetration.
- Build a website and implement your international plan sensibly.
- Pick a product or service to take overseas.
- Conduct market research to identify your prime target markets.
- Search out the data you need to predict how your product will sell in a specific geographic location.
- Prepare your product for export.
- Find cross-border customers.
- Establish a direct or indirect method of export.
- Hire a good lawyer, a savvy banker, a knowledgeable accountant and a seasoned transport specialist,
- Prepare pricing and determine your landed costs.
- Set up terms, conditions and other financing options.
- Brush up on your documentation and export licensing procedures.
- Implement an extraordinary after-sales service plan.
- Make personal contact with your new targets, armed with culture-specific information and courtesies, professionalism and consistency.
- Investigate international business travel tips.
- Explore cross-border alliances and partnerships.
- Enjoy the journey.
For explanations of these factors click here .
Tags: Business, Doing Business Internationally, factors, global, Rebecca Button, tips
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Beat the Weak U.S. Dollar–Go Global!
Wednesday, April 30th, 2008
Expanding overseas is a common idea entrepreneurs have in their business plans as a "down the road" growth option but with the recession and subsequent weakening of the U.S. dollar, it might just be the key to keeping your business afloat. Many companies are able to sell their products for twice as much as they can here!
While opening a brick and mortar store is certainly optimal, if you are a small company who doesn’t think you can spare the capital to do so, don’t fret. Another perfectly viable option is to open an international website (ie. a .uk site). Yet another option is to ship over seas and accept various forms of currency, if you’d prefer to test the international "waters" before you take the plunge.
Be forewarned however…going global is no easy (or small) task. Tracey Mullin of the NRF’s STORES Magazine states:
"In addition to potential hurdles with vendors, disparities in laws and differing customer priorities, retailers must identify a merchandise mix that appeals to a new demographic. While the transition may be a bit easier for online retailers, these companies face their own challenges nuances in language, inventory control, even the selection of website colors and fonts."
Yes, it’s risky and a lot of work…but it just might keep your business from succumbing to this dismal stateside economy.
Check out our Doing Business Internationally articles for more tips on how to get started going overseas.
Tags: Doing Business Internationally, economy, global business, international business, national retail federation, Rebecca Button, STORES Magazine
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Avoid Being Taken When Selling Internationally
Tuesday, February 19th, 2008
When you make your living off retail sales, you don’t want to turn away anyone who is poised to give you their money for your products. But there is one selling arena that can be little tricky - international sales.
Unfortunately, any number of seemingly perfect international sales opportunities could very well be scams in disguise. As you consider selling internationally, there are some precautions you need to take to make sure you don’t end up the next victim.
Where Do You Want To Sell?
While you may want to think the whole world is your oyster, there are some parts of the world that may not be the pearl you hope they will be. Some countries are more common locations for fraudulent buyers than others. For example, many areas of Eastern Europe are seemingly havens of fraud.
As you expand your business activities around the world, start with areas you are comfortable selling to - such as the UK, Australia, or Canada.
Eventually, as you learn the ropes of international selling and how to spot a scam, consider adding other countries to your list of places to do business.
What Payments Will You Accept?
It’s best if you take payments that are international, such as PayPal. The PayPal website will allow you to accept payments from people with accounts in any country. It will also take care of all the monetary conversions. If you use a credit card service, you can run any credit cards through your system.
Be leery of someone who wants to pay you through a wire service or by some sort of odd check. Many alleged “wire payments” are really scams that can make you believe you have money waiting so you will ship a package, but in reality, there is no money when you go to claim it at the wire transfer office.
Also, international checks can take much longer to clear than domestic ones. They may well be bad checks that you won’t know about until you have already shipped the item to the fraudulent buyer.
If you plan on accepting international checks, at least wait until the check clears before shipping the item. But the best advice we can give you is to not accept international checks at all, especially from buyers in high-risk countries.
Shipping
International shipping is not like US shipping. Prices can vary substantially for the same package depending on the destination. Make sure to weigh your complete package and use an online shipping calculator to find the proper weight and shipping price before you send the buyer the cost.
International shipping requires extra forms to be filled out as well. Some customers from other countries will ask you to lie on the customs forms you fill out to say the items are a gift, not a purchase. They’re trying to avoid duties charged by their country. If you’re caught in the lie, you can get in trouble - so don’t do it.
One big problem with international shipping is being able to prove the package made it to the destination. You should purchase insurance and tracking (and charge the buyer for these services); although when shipping out of the country, being able to keep track of a package is spotty at best.
If you don’t take these precautions, you may well find that fraudulent buyers will claim they never got the package and ask for their money back, even if they did receive your items.
Legalities
While some things are legal to sell in the US, they are not always okay to sell in other countries. Before you ship your items, make sure the things you are selling are legal to ship into the destination country - or you could be considered someone trying to ship in illegal contraband.
While it sounds like more of a nightmare than it’s worth, doing business internationally can be a very profitable venture and a rewarding experience. You open your business to multitudes of new sellers who may not be able to get the items you offer in their countries.
The important thing to remember is to balance the possible profits with caution and research to know what you are getting into.
Tags: Doing Business Internationally, global business, international payment, International shipping, Leeia Ladipoh, scams
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How to Create an Export Plan to Sell Internationally
Friday, February 15th, 2008
Once you have decided to sell your company’s products overseas, it’s crucial that an export plan is developed. When preparing your export plan, you’ll be able to research and carefully examine your potential export markets, develop company goals, and determine what (if any) limitations exist. The result: a custom-designed strategy that prepares your company, products, and promotional efforts to succeed in the export business.
Tips for creating a successful export plan
Keep it brief - Your company’s export plan should be detailed, yet concise. It should be easily understood by other members of your company. It’s important that goals and objectives are written clearly so that they are not misunderstood by those involved in the process.
Be specific - Lay out definitive goals and objectives for your company, for example sales goals or market saturation goals.
Make it factual - It will take some time, but it’s imperative that an export plan is based on facts, not assumptions. You may need to call factories, shipping companies, etc. to get pricing, but the more your export plan is based in facts, the more useful it will be to your company.
Be honest - The most important thing you can do in your business’ export plan is to accept and address the company’s limitations and constraints. List them out and attempt to find a solution to fill in those gaps.
Questions to answer in your company’s export plan
In developing a thorough export plan, it’s essential that all of these questions are answered in full, with specific goals listed for each. Be sure to do the research necessary in order to provide accurate answers, rather than just guesses and estimates.
1. Which of your company’s product(s) have been chosen for export?
2. Will any modifications need to be made in order to adapt the product(s) for overseas markets?
3. Which countries have been chosen as export markets?
4. What is the customer target market for each country?
5. Through which channels will the product(s) reach the customers in each country?
6. Are there any country-specific limitations that exist for any of the targeted export markets? If so, how will they be addressed?
7. What will the product(s) export sale prices be in each country?
8. Which company employees will be involved in the exporting process, and what will their roles be?
If you take the time to create a well-thought-out export plan, your business will be rewarded with an accurate presentation of exporting facts - specifically tailored to the needs of your company and its products. Companies that begin exporting their products without a prepared export plan can quickly find that their assumptions were way off or that a crucial product adaptation was missed. Creating an export plan will take some time to develop, however without one you could make a mistake that costs your business tens of thousands of dollars. In the case of exporting, a bit of preparation could very well save your company from financial disaster.
Tags: Carrie Hinkel, Doing Business Internationally, export, international business, selling internationally, tips
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How Value-Added Taxes Effect U.S. Exporters
Friday, February 15th, 2008
The Value-Added Tax (VAT) was created in the 1950s by French economist Maurice Laur. It is a government tax that is charged at each stage of production. For instance, when a company buys parts, then buys more parts - for each purchase, a separate VAT is paid. When a company exports into a VAT country, that company (or the company purchasing the products) must pay a VAT based on the value of the goods. There are nearly 140 countries that use the VAT system, with the average percentage being 15%, though it can go as high as 25% in Norway, Sweden and Denmark.
How does a VAT effect U.S. exporters?
When companies in VAT countries export products into the U.S, they are privy to a great tax advantage. Once their goods arrive in the U.S., these companies are eligible to receive a refund of the VAT that they previously paid. With a 10-20% tax rate, this is significant, allowing these companies to sell their products for less then what they sell for in their own countries. When a U.S. company exports its products into a VAT country, they (or the company buying from them) are required to pay a VAT, based on the price of the goods. In turn, these goods will now sell at a much higher price than they do in the U.S.
This puts U.S. exporters at a big disadvantage, and it’s something that needs to be considered when deciding which products to export. There have been many situations where a product that was a great seller in the U.S. flopped overseas because the VAT priced it out of the market.
A partial list of VAT rates for different countries
Outside of the European Union, some countries may have another name for this tax, but it works the same way. For these countries, the local name for the VAT is in parentheses.
* Canada: 5% (GST)
* China: 17% (Pinyin)
* Germany: 19%
* India: 12.5%
* Ireland: 21%
* Israel: 15.% (Ma’am)
* Italy: 20%
* Japan: 5% (Consumption tax)
* Russia: 18% (HAC NDS)
* South Africa: 14%
* South Korea: 10%
* U.K.: 17.5%
As you can see, rates vary with each country, and the impact it could have on your product’s success outside the U.S. is enormous. However, it’s important to realize that consumers living in countries with a VAT tax are used to their higher prices. And, your competitors have to pay that tax as well. Where the problem arises is when a U.S. company is exporting a new and unique product with limited competition. If the price is already high in the U.S., and profit margins are tight, you need to consider if adding another 10-20% to the price will be received favorably in a country with a VAT.
Just like in the U.S., there are companies overseas who will conduct focus groups and test marketing for products before you endure the expense of exporting. The small expense of a few focus groups can prove to be a bit of insurance for your exporting investment.
Tags: Carrie Hinkel, Doing Business Internationally, European Union, Finance and Accounting, taxes, VAT
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Extending Credit to Foreign Buyers
Thursday, February 14th, 2008
With exporting, negotiations on financing terms can be just as arduous as those on pricing. With competitive products pouring in from companies all around the globe, the financing terms you offer can often times be the deciding factor on whether or not a buyer will make their purchase from you.
Of course, as an exporter you’ll want to get paid as quickly as possible; however, when dealing with foreign markets you’ll most likely have to extend your credit terms if you want to make a sale. If your products are shipping via container ship, there will be a 20-30 day shipping time that needs to be considered. Most overseas importers are unwilling to pay an invoice before they even receive the goods. If you are used to getting net 30 terms for domestic sales, you will need to seriously rethink your export financing terms.
Risk verses reward
Of course, with extending such generous finance terms comes risk. Risk that you will need that cash before the buyer pays you. However, if you decline to offer favorable payment terms, you very well may lose out on the sale completely. Here are some important factors to consider when deciding what payment terms to extend to a foreign buyer:
Uniqueness of your company’s products. If you are the sole manufacturer of a unique and specialized product that is in demand, then you may hold the upper hand in the negotiations and will be able to shy away from longer financing terms. However, if you are selling a product that is similar to others and has a lot of competition, then chances are you will need to offer longer payment terms in order to secure any overseas sales. With so much competition, if you’re not willing to budge on terms you can bet another company will.
Ability to obtain financing, if needed. Part of the risk that comes with extending payment terms is not knowing whether or not your company will need that cash before the buyer pays. If your company is small then your invoices for parts, labor and shipping will surely arrive before you get paid. In that case, will you be able to obtain temporary financing to keep your company afloat until you receive payment?
What you can offer instead of longer financing. If you are not able to offer payment terms as long as your competitors, then what else can you offer? Perhaps a lower cost, custom printing at no charge, or an added accessory? If you can’t compete on financing, then think of a way you can compete so that your company is not out of consideration.
Flexibility of the buyer. It’s possible that a foreign buyer will agree to payment by escrow, letter of credit (LC) or a partial payment upfront. If you are not able to give extended payment terms, then see if you are able to negotiate the terms with the buyer, so that they are less one-sided.
Whether or not extending financing to a foreign buyer is the right course of action, depends on a variety of factors. If there is a high demand and little competition for your products, then it’s safe to say you will not be forced into a corner over finance terms. However, if you are merely a fish in a sea of similar products, then you’ll have to compete with the best of them - and most times it’s the company with the best pricing and financing terms that "wins" the purchase order.
Tags: arranging credit, Carrie Hinkel, Doing Business Internationally, Finance, Finance and Accounting, foreign markets, international payment
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Common Mistakes Made by Exporters (and How to Avoid Them!)
Wednesday, February 13th, 2008
In a rush to get their products selling in an overseas market, many business owners fall prey to one or more common "exporting pitfalls". It’s understandable that a business owner is excited about the possibilities that a new, wide-open market can bring to the company, but it’s important to remember that exporting involves big money and big risk. In order to give your business the best chance at a successful exporting experience, it’s crucial to take note of the most common mistakes made by new exporters.
Exporting mistakes to avoid
Choosing overseas partners too quickly - Many times a company is so focused on the goal of getting their products overseas, that they form partnerships too quickly and rush into business relationships with people/companies they probably shouldn’t. Whether it’s a warehouse, distributors, or marketing companies, it’s imperative that you thoroughly check the background of each and talk with past clients, if possible. Just like in the U.S., there are plenty of people overseas who are in business to scam small business owners.
Failing to adapt product, packaging, or literature to foreign market - It seems like an obvious mistake to avoid, but thousands of companies (including big-name companies) have fallen into this trap. Perhaps they didn’t change the electrical adapter to fit a particular country’s outlet, or the packaging and instructions aren’t in the local language, or the wording was poorly translated , or packaging pictures, language or even the product name is considered offensive. There are plenty of things that can go wrong, so double check everything and have the finished product inspected by several people who are from the country you are exporting to.
Putting domestic customers before foreign customers - This is probably one of the easiest and most common exporting traps to fall into. If your product is a successful seller in the U.S., perhaps a good part of the reason is because of great customer service. While it may be more difficult to communicate with customers from a non-English-speaking country, it’s certainly not impossible. You could hire someone who speaks that language to answer e-mails and serve as the customer service contact, or you could outsource that job to an overseas company. It’s important to treat your foreign customers the same way as you treat your domestic customers, even if it means extra effort or expense on your part.
Failing to have a marketing plan in place - It’s funny, but some business owners think their products will magically sell in a foreign marketplace once they arrive at the port. It will take plenty of time and research to devise a marketing plan that details how your products will get into the hands of customers. It’s best to have this plan in place well before your goods are loaded onto the container ship, or else your products could end up sitting at the overseas port for months and months. If you’re unsure about marketing in a certain country, then it would be a good idea to hire someone in that country to help you with or oversee your marketing efforts there.
Taking these common mistakes into consideration could very well save you from future expenses and headaches. If you are new to exporting, then it is important that you are aware of all the risks involved and what you can do to avoid them. Exporting products can, no doubt, be a very lucrative business if done properly. Good luck!
Tags: Carrie Hinkel, Doing Business Internationally, exporting, exporting pitfalls, marketing plans, selling overseas
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How to Prepare for a Product Sourcing Trade Show in China
Friday, February 8th, 2008
For businesses interested in importing products, attending a trade show in China is the best place to start. You’ll have the opportunity to visit thousands of booths - meeting with suppliers, seeing and testing products, and talking to other buyers. You’ll feel a lot more comfortable with the importing process after attending a show, and chances are you’ll be ready to place your first purchase order with a Chinese manufacturer or trading company. To help ensure that your trip to China is a success, here are some tips to help you prepare for the visit:
Create a product binder - This is simply a three-ring binder with different colored folders for each of the product types you are interested in. Before you leave for the trade show, prepare a detailed product requirements sheet for each of the product folders. This sheet should look professional, as it can also serve as an addition to a purchase order. Your product binder should also include folders for: purchase orders (have several blank purchase order forms printed), contact information and business cards you will receive at the trade show, product sheets (that you will collect at the show), questions for suppliers (the questions will be covered next but once prepared, keep several blank sheets in this folder so you can fill them in as you talk with suppliers you are interested in purchasing from) and miscellaneous information. Taking a product binder with you to a trade show is one of the best ways to help you stay organized and avoid later having to sift through a sea of papers.
Prepare a question sheet - Once you find a product that you are interested in, you’ll want to sit down with the supplier to make sure that you are comfortable with the company and that they meet your requirements. Here is a list of questions you may want to include on your question sheet:
* What is the FOB Hong Kong price? That is the price including delivery to the port. You will then have to arrange for transportation from the port to your warehouse.
* What is the minimum order quantity? You’ll find that some suppliers will only sell in container sizes - 20′ or 40′; however, there are others who will agree to sell in smaller quantities - for an increase in price, of course.
* What is the lead time? With this question, you’re asking how long it will take for the goods to get to the Hong Kong port, once you place the order.
* What are your payment terms? Most suppliers will require a percentage of the purchase order total up front. Typically, this will be about 20-30 percent; however, if you are having the products or packaging customized, then the down payment could be as much as 50 percent of the order total.
* Do you offer OEM/customization services? If you wish to have your own logo on the product, or unique product packaging, then you can find out if and how a supplier is able to work with you.
* What quality assurance procedures do you have in place? If they mention a third party quality assurance company, you may want to ask for their contact information in order to double check the information.
* Have you exported to the U.S. before? If so, you should also ask: 1) May I have the contact information to some of your U.S. clients and 2) Do you have the certificates and approvals for this product that are necessary in the U.S.?
* Are you a manufacturer or a trading company? While a manufacturer actually owns the rights to the product and manufacturers it, a trading company is a representative for a manufacturer; many times a trading company will represent several manufacturers.
* Do you have an export license? If not, they will be able to go through an export company, though this may add additional costs to your product.
Placing a purchase order - If the supplier has samples at the trade show and the company was able to answer all your questions satisfactorily, you may decide to place a purchase order right at the trade show - many buyers do. However, if this is your first importing endeavor, you may feel more comfortable collecting all of your trade show information and then reviewing it once you are back in the office. In this case, it would be wise for you to order product samples from the suppliers you are interested in (you will be asked to pay for both the product and shipping). Or, you could ask a supplier if you can place a small initial order, lower than the manufacturer’s typical minimum order.
Attending a trade show in China is both exciting and overwhelming, but being well prepared and organized will definitely make your trip less stressful and more productive!
Tags: Carrie Hinkel, china, Doing Business Internationally, importing products, source, Trade Shows
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Gathering Foreign Market Research
Monday, February 4th, 2008
There are many resources available to help you gather information and market research and get your business ready to sell internationally. The U.S. Small Business Administration offers an International Marketing Plan workbook you can download and fill out. This workbook is an excellent resource to help you to prepare your business to enter the international marketplace and will take you through the steps of exporting.
Some Key Questions to Ask Yourself Before You
Begin Exporting Are:
* Should I expand my company through exporting?
* Do I have any products or services I can export?
* What is the cost of failure?
* Are we prepared for the demand of success?
When you are ready to begin your research, you need to start by identifying the most profitable foreign markets for your products. To get this process underway you will need to classify your product by the HS-Code/Schedule B number found in the Small Business Administration’s export guide or in the export assistance center.
Once you have the HS-Code/Schedule B number, you can then focus in on finding the countries with the markets that will be best suited for your product. This will help you determine which foreign markets will be the easiest to penetrate with the products you intend to export and further define those export markets you intend to focus on.
If you are aware of any U.S. customers or other companies who are doing business with the country you are hoping to export to, talk with them and learn from their experience. Additionally, you can learn a great deal from companies who are exporting, even if their product or industry is different than yours. Often times you can gain good market data through the US International Trade Administration , who also many times has a list of trade associations in a specific industry on their web page.
The following is a list of government resources available to you to help in conducting your research on your international expansion.
* U.S. Export Assistance Centers (USEACs)
* The U.S. Small Business Administration
* The United States Export-Import Bank
* The United States Department of Agriculture
* The United States Department of Commerce and Trade
There are also many resources available that may or may not be tied to the government, but are not considered federal government resources.
These include:
* State Economic Development Offices
* Foreign Embassy Commercial Sections
* Exporters’ Associations
* Trade Associations
With the number of avenues available and the ease of which information can be accessed, you will have no trouble finding and evaluating opportunities for exporting your product or services.
Tags: business resources, Doing Business Internationally, foreign market research, importing products, international trade administration, larry Slusser
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