Posts Tagged ‘International Market’
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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The Basics of Working With Chinese Companies
Friday, September 14th, 2007
If you have ever considered doing business with Chinese companies, it’s important to know a little bit about the country before you dive in headfirst. What are the business practices in China, and how does culture affect business interactions?
Doing Business
Most companies start doing business with China in order to source products at cheaper prices. Experts agree that this is the safest way to get started. Businesses from across the globe have saved billions of dollars in cheaper parts by taking advantage of what China has to offer. This has been going on since the mid 1990s, and continues as a trend today. The best way to start is to source parts for sale elsewhere, rather than attempt to own or co-own a factory in China. It’s not a good idea to get your feet wet by trying to create products for the local Chinese market.
However, it’s important to realize that doing business in China is not the same as in other countries. You have to be ready to face some challenges and headaches. China still lacks a good basic infrastructure, especially when it comes to legislation and banking. The laws differ depending on the region, and rules are not set in stone - they are always in flux and could change within a short period of time. A good way to start is to have local legal counsel and a good sales team in China to help you wade through all the issues that you’ll come up against.
Also keep in mind that doing business with China is slowly becoming less profitable. Labor costs are rising due to demand for services and products, so China may soon become less competitive when it comes to sourcing.
Culture
The cultural and political differences between China and North America add another layer of complexity to carrying out business in this country. Of course, the language barrier is one hurdle you may have to overcome, as well as bureaucratic issues; but it’s also important to understand the history and culture of China.
China is currently experiencing a rapid transition from an agricultural society to an urban one. Essentially, it’s transforming into a market economy. At the same time, the government plays a very big role in how business is run in China, so everything tends to be much more bureaucratic. Before you start doing business in China, you have to learn all about the monetary, regulatory, and legal issues you are sure to face.
It’s important to respect Chinese culture if you want to do well in China. Companies experienced in dealing with China have found they achieve much more success when they respect the culture and all that it represents. One cultural difference comes up during negotiations. Western businesses usually want to make a deal quickly, while the Chinese like to draw out the negotiations. Patience is key when doing business in China.
As long as you prepare for the challenges of doing business overseas, specifically in China, it should turn out to be a successful - and profitable - venture.
Tags: china, culture, Doing Business Internationally, International Market, international payment
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International Trade - Importing Basics
Tuesday, July 31st, 2007
It is very essential to understand the importing basics if you plan to begin international trade that requires importing something from foreign countries to your country. History of importing goes as far back as the beginning of trading because you have to get those goods and materials that are not available in the country where we are doing business. You may need to import a particular material, even if it is available in the country, when you can get it from another country at a cheaper price. Whatever may be the reason for importing, you must understand some practical aspects related with the importing of goods. These include the legal aspects as well as the method of getting the required goods in to the country.
Importing Business Things to Consider:
Importing basics for international trade require that you plan in such a way that all the elements of the process fit together for smooth operation. For example, take the advice of legal experts when you sign contracts with your foreign counterpart. Also keep in mind the due dates of the payments for the material you are importing from the other countries. Do not expect that the exchange rate will remain unchanged after you have placed the order. Take care that you are complying with all the rules and regulations in this regard. Moreover, plan for transportation, storage, insurance and documentation. Get all the terms of the contract examined by legal experts. Also, ensure what the implications will be if the imported product is not up to the mark in quality.
If there is any rule that states that a license is necessary for importing in international trade, then collect information about it and get the required license from competent authorities. Another importing basic in international trade is management of transport. First, determine the quantity of goods you are planning to import. The quantity of goods is a major factor in deciding the means of transport. For example, if the quantity is too much then it may not be feasible to import by air transportation. Another factor is the length of time taken in the process of transportation. If the material you are going to import is to be used as raw material for the production of some item then considering this duration becomes more important.
There are two kinds of importers of goods for international trade. Some importers directly import the required goods. On the other hand, there are people who depute someone else to handle all the issues related to the importing and purchase from him. However, direct importing requires that you be personally in touch with the overseas supplier of the material. Profitability is more in this case but you have to face the problems of language, exchange rate fluctuation and extra costs.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community.
Article Source: http://EzineArticles.com/
Tags: Doing Business Internationally, import, International Market, shipping, Small Business Consulting
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