Posts Tagged ‘exporting’
As Deficit Declines, Small Businesses and Manufacturers Encouraged to Export
Thursday, December 18th, 2008
While the U.S. current account deficit declined more than expected, efforts in promoting overseas exporting remains persistent among the government, economists, and industry experts.
The reason why: a trade deficit of more than $214 billion, which they say is more than enough evidence that the United States is still consuming more than it is producing.
The current account is the broadest measurement of global economic activity by the United States, as it incorporates investment flows with trade of goods and services. Its deficit current amounts to $174 billion, down 3.7 percent from $180.9 billion.
Peter Morici, a University of Maryland international business professor, believes that the trade deficit is almost entirely responsible for the current account deficit, and that cutting it in half would pull the country out of its recession.
“Every dollar spent on imports that is not matched by a dollar in exports reduces domestic demand and employment,” he wrote in Seeking Alpha.
The manufacturing sector in particular has suffered under the trade deficit, with a 1.6 percent decline in production last month and over 4 million jobs cut since 2000.
Over the years, the National Association of Manufacturers has watched domestically-centered manufacturers suffer as exporting-oriented manufacturers prosper, with a 17 percent growth in production since the end of 2005.
“If your company is not exporting, it needs to,” said Dan Akman, assistant vice president for marketing and business development, to World Trade Magazine on Dec. 3.
Meanwhile, the U.S. government continues to believe in the exporting potential of small and medium-sized businesses. In 2006, the International Trade Administration reported that such businesses exported $263 billion in revenue. To date, more than 250,000 of them are currently exporting, according to U.S. Secretary of Commerce Carlos Guitierrez.
“It’s especially important that our entrepreneurs and small business owners have the tools they need to take advantage of expanding international marketing opportunities,” he said at last month’s Small Business Administration’s International Trade Symposium.
Tags: Carlos Gutierrez, christina lee, current account deficit, exporting, manufacturers
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With China as Leading Clothing Exporter, U.S. Trade Associations Demand Fair Practice
Monday, November 10th, 2008
As world trade growth slipped to 6 percent last year, U.S. trade associations and experts still debate about how its nation can possibly fare in a global clothing market with China as its reigning exporter.
Despite symptoms of an overall weakening economy, China has taken over an industry largely dominated by Mexico, the Dominican Republic, and some Central American countries. As the world’s second largest exporter of merchandise in 2007, China also supplied more than a third of the world’s clothing exports – amounting to $115.2 billion, according to a World Trade Organization report.
Meanwhile, the global economy is slowing down because partially developed nations have decreased their demand for imports, according to the World Trade Organization. U.S. clothing imports from export processing zones – where materials and intermediate goods are processed – have declined an average annual rate of 13.4 percent over the past ten years.
China joined the World Trade Organization as a developing nation in 2001, four years before organization trade safeguards expired. U.S textile and clothing associations have since accused China of hurting its already vulnerable domestic industry, with rising tariffs and a greatly undervalued yuan.
“Textile manufacturers in the United States are the most competitive in the world, but they cannot compete indefinitely against producers from countries like China that both engage in predatory practices and benefit from illegal subsidies,” said Ruth Stephens, executive director of the United States Industrial Fabrics Institute , in a statement. The institute has been working toward the implementation of a monitor program toward imports from China, with other associations like the National Council of Textile Organizations.
But U.S. economist C. Fred Bergsten argues that China is not being deliberately manipulative or vindictive toward the United States.
“What these policies demonstrate is that China’s international mindset has not kept pace with its breathtaking economic ascent,” he wrote for Foreign Affairs . “China continues to act as a small country with little impact on the global system at large and therefore little responsibility for it.”
As of July, Chinese economists and its National Bureau of Statistics found its economy to be “in a dilemma, struggling for a delicate balance between maintaining a healthy growth and taming inflation” during an overall global downturn. In June, China exported US$9.87 billion worth of clothing and accessories, a 15 percent month-to-month decline from 2007, according to a Ministry of Foreign Affairs report.
Tags: christina lee, clothing, exporting, foreign markets, World Trade Organization
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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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Preparing Your Business to Enter the International Market
Thursday, January 3rd, 2008
There are many exciting international possibilities for your business. Say for example you own a vintage clothing store. Did you know there is a decent sized market around the world for vintage US clothing, from the early 30s and 40s to today’s current designs? You could be hitting garage sales and flea markets and exporting the bargains you find to the Far East for a tidy profit.
While most of us have experience in our lives as consumers of businesses in America, few of us have experience as consumers internationally. This lack of experience can make entering a foreign market with your business a very scary proposition. This fear, however understandable, could be costing your business or your business idea the opportunity for additional sales and profits.
There are many options for foreign market entry strategies, and there are just as many businesses that are profitable to export to other countries. The entry possibilities include direct and indirect exporting, joint ventures, and strategic alliances between your business and a foreign partner.
There are benefits and risks associated with each method, but all are contingent on the type of product you are exporting, the need you will have for product or service support, and the economic, political, business, and cultural environment of the country you are attempting to gain entry into.
The best strategy will depend on your level of research and the quality of your plan. Additionally, the level of your company’s commitment to your overseas or foreign expansion and your willingness to accept risk will further define the level of your foreign expansion.
If you have made the decision to take your company international and move into direct exporting, you need to put together a list of required resources and have a solid strategy to deal with the required regulations and logistics challenges. The Small Business Administration’s Basic Guide to Exporting is an excellent tool and can be downloaded online.
This guide is an excellent resource for the first time exporter with descriptions of export steps, terminology, and most of the forms you will need to negotiate and close the sale, as well as to complete the shipping documents. The guide also has a listing of INCO terms.
You will want to make sure you have qualified experts to advise you, including an attorney with international experience, preferably in the country you are going to export to. A freight company also experienced in your country of expansion and a company you can benchmark with as you prepare to export.
It is possible to hire one firm to accomplish all of these things for you, but there is a considerable cost for this type of consulting. If you are willing to spend the time doing the research, you can gain the knowledge and information you require. Once you have the information and a solid plan in place, assemble your team of advisors and go international.
Tags: business plan, Doing Business Internationally, exporting, international, joint ventures, larry Slusser
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The Risks and Rewards of Exporting
Wednesday, January 2nd, 2008
Exporting can improve your small business in a number of ways. It can lead to additional sales revenue which may not have been possible in your domestic market. Going international can open up markets you did not have access to. It also can lead to increased profits, depending on the margins you are able to generate on your exported products.
Exporting does, however, have its risks and can leave you feeling out of control. There are a large number of variables that can impact your ability to export, many of which are beyond your control. So before committing your business to exporting your product or service, you must make certain you are aware of the positives as well as the negatives associated with exporting.
The Advantages
With increasing revenue you will need to buy larger amounts of products or raw materials from your suppliers. This will improve your negotiating power with your vendors/suppliers, enabling you to get better pricing. It is possible that you might qualify for discounts or better pricing per unit or you may be able to negotiate longer credit terms, meaning that you can keep potential borrowing to a minimum.
A new market means new customers who have not been exposed to all of your products. This is a great time to incorporate your vertical products and ancillary offering that compliment your main products or services. With a new market, the timing is ripe for you to move quickly and sell to your new customers.
Exporting can lead to increased sales which, if the costs are managed properly, can lead to a dramatic increase in profits. If your business has any seasonality to its sales patterns, an export market in your traditional “off season” can improve productivity, sales, and profits and can help even out the seasonal cycle you are stuck on.
When your business only has a few large clients, the loss of one of those clients can be particularly devastating to your business and the recovery from such a blow takes time. If you are diversified and have clients worldwide, you have improved your position against this type of a lost business or lost business volume scenario.
The Disadvantages
One of the biggest disadvantages of exporting for the small business is the increased exposure to risk. There are a variety of risks associated with exporting, just as there are risks in dealing with the domestic business climate. The risks include:
* Fluctuations in currencies can occur on a daily basis and effect both revenues and profits
* Shipping loss or damage to your products headed overseas
* Collection problems and slow paying accounts
* Delivery delays and customer service inquiries
* Language barrier when working through contracts, agreements, and other legal documents and solutions
* Ever changing market conditions
Language and cultural differences can also cause issues for your exporting business. Interpreters and cultural consultants cost money if you don’t hire a local contact in the country you are exporting to. Hiring a foreign national can cause a different set of complications you need to be ready to deal with.
While it is possible to outsource nearly every stage of delivery, this will cost money and further reduce profit margins. You may need more space to store and prepare products while you put an export order together. Additionally, if you are managing the new export offering, who will manage your current operations?
Exporting is an exciting expansion to a business that can bring tremendous financial rewards, but there is a risk associated with this potential reward. Consult and update your business plan and ensure you conduct an in depth risk-reward analysis before you move forward with your export plan.
Tags: Doing Business Internationally, exporting, International Market, International shipping, larry Slusser, lowering risk
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Taking the Next Step: Exporting Your Goods
Monday, November 12th, 2007
So, your products have been selling so great here in the U.S. that you’re thinking about selling them in another country. That’s great! Exporting can be a terrific way to grow your business and expand your market.
Exporting can seem a bit intimidating to those who have never done it, but if you have all the information and take the time to thoroughly understand the process, you’ll find that exporting can be a fairly simple process.
Here are some basic steps to help you understand the exporting process:
Finding your overseas market - Once you’ve decided that you would like to export your products, you will need to find buyers for your products. Many exporters find that working with a foreign partner makes the most sense, since they have the buying contacts. Finding the right overseas retailers or distributors for your products may be time consuming but it’s definitely not impossible. A good place to start is on two websites that are sponsored by the U.S. Commerce Department: www.export.gov and www.buyusa.com . Both sites contain directories of foreign buyers.
Making your product ready for a foreign market - This isn’t always simple. If you are selling an electrical product, you may need to make modifications to both the voltage and adapter. Another thing to consider is whether or not your product needs to be in metric standards in order to integrate with other foreign products. Also, your instructions, warranties, product packaging and labels will need to be in that country’s language, with an easy way for foreign customers to submit warranty information.
Shipping Your Products - There is a lot of documentation involved in exporting products and many companies choose to hire a freight forwarder to take care of the shipping and prepare the paperwork. The money that you spend on a freight forwarder will many times be saved by their shipper connections and discounts. For more about freight forwarding, read our article Choosing and Using a Freight Forwarder .
Here are the documents you may need in order to ship your products overseas:
Export license - Normally, exports don’t require this license, however, there are certain categories of products which do need an export license in order to leave the U.S. They are:
* Foodstuffs and chemicals
* Agricultural products
Certificate of origin - In order to qualify for a country’s preferential tariff treatment, you will need to have this form. Many countries allow products a duty-free entrance into their country as long as you comply with their rule of origin.
Insurance certificate - This is usually required in order for your goods to be in transit. Usually the exporter pays for insurance up to the arriving port and then the shipping company provides insurance to the final delivery destination.
Bill of Lading - This is the contract between the exporter and your carrier. The carrier is typically the issuer of this document; however the terms are usually negotiable.
Airway bill - This is only needed for freight shipping via air. Again, the carrier issues it; however, this bill is typically non negotiable.
Invoice - If your goods are being shipped to a particular buyer, and not to a warehouse, then your shipment should include an invoice. This will contain exporter information, payment terms, pricing information, total quantities and the shipment’s weight.
Packing list - The packing list needs to clearly state exactly what is in the containers, the value of the products, and the weight of the products. If there is a mistake on your packing list, it may result in your shipment being delayed in customs.
If you’re a first-time exporter, it may be wise to enlist the help of a freight forwarder to help you with all the details and to make exporting even easier to you. You’ll find that once you understand the process, exporting isn’t as mystifying as you once thought.
Tags: Carrie Hinkel, Doing Business Internationally, expanding, exporting, International shipping, selling overseas
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Tool of the Trade: Forward Contracts
Monday, June 25th, 2007
Forward Contracts are a very useful tool for all of those importers/exporters who have to keep their margins tight.
For many companies the "head in the sand technique" is very popular. Order goods today, send over the deposit and then in 6 weeks when the goods are about to come into the docks and payment on the rest is due, that’s when they notice the market has moved and "oops" - it has gone the wrong way. Here is a quick but effective example:
A US company wants to buy goods from the UK. They are quoted at 100,000 GBP, and the UK company expects to be paid in Pound Sterling. The order is placed and the US company has 2 choices: one is to pay the deposit using a spot payment and pay the remainder on a spot payment in 6 to 8 weeks as per the contract, and the other option is to buy a forward contract which includes the deposit money.
If we had a price of $1.95 to the pound at the time of the order and a forward was booked, this would equate to a cost of $195,000. The US company would know from day one how much those goods from the UK were going to cost so prices in the states could be set accordingly.
However, if a spot price was used it might look something like this: 30% deposit, 30,000 GBP at $1.95 is $58,500 and then 6 weeks later the markets have moved and the dollar is weaker and the US company is now buying the remaining 70,000 GBP at $1.99 per Pound. A total of $139,300 added to the deposit paid means a cost of $197,800 for the same 100,000 GBP - a difference of $2,800 for doing the same job.
Now I know you can argue that the markets could move the other way and you could save a similar amount; but what we are talking about here is piece of mind and good business sense. If you know how much something is going to cost you in advance then you can plan your budget and your cost; but a major event in the world the day before you have to buy currency could be devastating on your business. Let me help you make your business more profitable - if you are exchanging currencies around the world we can help wherever you are based.
Tags: Apfx S, Apfx Services, Doing Business Internationally, exporting, foreign exchange, forward contacts, import
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