U'S' Commercial Service

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U.S. Commercial Service

• Exporting 101 Increase Your Sales and Profits
  through International Trade
• Building Business Together Loudoun SBDC
• March 10, 2009

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Why Export?

• 95 of the worlds consumers live outside the USA
• Increase sales and profits
• Enhance competitiveness
• Long-term security
• Stabilize market fluctuations
• Sell excess production capacity

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Debunking the Export Myths

• Small businesses cant or dont export
• In fact, small and medium-sized companies
• make up 97 of all U.S. exporters
• More than 2/3 of exporters have fewer than
• 20 employees

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Debunking the Export Myths (contd)

• Services industries dont export
• The U.S. actually has a trade surplus in the
• services industries
• Professional services, franchise, training and
• education, business consulting, advertising and
• marketing, travel and tourism, and engineering
• and construction are all exporting industries

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Debunking the Export Myths (contd)

• Free trade agreements only benefit large
  corporations
• In the 10 years after NAFTA, the number of small
  business exporters to Mexico and Canada have more
  than doubled, increasing from 114,000 to 236,000
• The U.S. government has signed or completed Free
  Trade Agreements with 11 countries, including
  Australia, Morocco,
• Chile, Sin gapore, Central America, the
  Dominican Republic and Bahrain.

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Are you Export Ready?

• Have you tapped into all your domestic markets?
• Is top management willing to commit necessary
  resources (budget and time)
• Have you developed an international strategy?
• Is your product/service unique and will it have
  potential in your target market(s)?

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Developing an Export PlanThe Ten Questions

• 1. Which products are selected for export
  development? What modifications, if any, must be
  made to adapt them to overseas markets?
• 2. Which countries are targeted for sales
  development?
• 3. In each country, what is the basic customer
  profile?

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Developing an Export Plan The Ten Questions

• 4. What special challenges pertain to each
  market and what strategy will be used to address
  them?
• 5. How will the products export sale price be
  determined?
• 6. What specific operational steps must be taken
  and when?

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Developing an Export Plan The Ten Questions

• 7. What will be the time frame for implementing
  each element of the plan?
• 8. What personnel and company resources will be
  dedicated to exporting?
• 9. What will be the cost in time and money for
  each element ?
• 10. How will results be evaluated?

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Develop a Marketing Plan

• As you can imagine, many foreign markets
  differ greatly from the United States. Once you
  have decided that your company is able and
  committed to exporting, the next step is to
  develop a marketing plan.
• A clearly written marketing strategy can be a
  great asset to your export plan

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Do Market Research

• Market research encompasses all methods that a
  company may use to determine which foreign
  markets have the best potential for its products
• There are two types of market research primary
  and secondary

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Steps to Market Research

• A. Screen Potential Markets
• Step 1. Obtain export statistics that indicate
  product exports to various countries.
• Step 2. Identify five to ten large and fast
  growing markets for the firms products
• Step 3. Identify smaller markets that could
  provide ground-floor opportunities
• Step 4. Target three to five statistically
  promising markets for further assessment

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Steps to Market Research

• B. Assess Targeted Markets
• Step 1.Examine trends for company products and
  calculate overall consumption
• Step 2. Ascertain the sources of competition
• Step 3. Analyze factors affecting marketing and
  use of the product
• Step 4. Identify any foreign barriers to entry
• Step 5. Check for any exporting incentives

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Steps to Market Research

• C. Draw conclusions
• After analyzing the data, the company may
  conclude that its marketing resources would be
  applied more effectively to a few countries.
• The Companys Internal Resources Should Determine
  its Level of Effort

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Market Research

• Country Commercial Guides - Prepared annually by
  US Embassy Staff, CCGs contain information on the
  business and economic situation of foreign
  countries and the political climate as it affects
  U.S. business and foreign investments.
• Market Research - In-depth analysis of specific
  industry sectors and sub-sectors within a given
  market and brief updates within a foreign country
  highlighting specific market opportunities, trade
  events, or changes in market conditions.
• Customized Market Research - Provides indepth
  answers to specific questions regarding your
  product in a target market market trends and
  size customary distribution and promotion
  practices market entry requirements
  regulations, product standards and registration
  key competitors potential agents, distributors
  or strategic partners and more.

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• Methods and Channels for Exporting

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Approaches to Exporting

• Passively filling orders from domestic buyers who
  then export the product.
• Reactively Exporting in Response to Inquiries
• Proactively Exporting Directly

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Indirect Exporting

• Indirect Exporting provides a way to penetrate
  foreign markets without the complexities and
  risks of direct exporting.

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Direct Exporting

• Direct exporting gives the exporter more control
  over the export process, potentially higher
  profits, and a closer relationship with the
  overseas buyer, but requires an increased
  devotion of time, money, and personnel.

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Direct Exporting Options Include

• Sales Representatives
• Agents
• Distributors
• Foreign Retailers
• End Users

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• Making Contacts

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Locating Foreign Buyers

• U.S. Department of Commerce Programs
  (International Partner Search, Gold Key)
• State Programs (Trade Missions)
• Trade Leads
• Trade Shows
• Trade Associations

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Contacting and Evaluating Foreign Representatives

• Once your company has identified a number of
  potential representatives or distributors in the
  selected market, it should contact these
  companies immediately.

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Investigating Potential Representatives

• After making contact, evaluate and screen these
  potential representatives
• trade and bank references
• credit worthiness
• current status and company history
• methods of introducing new products into the
  sales territory
• Travel to the foreign country to make
  observations and establish a relationship

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Negotiating an Agreement with a Foreign
Representative
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Negotiation Points

• The agreement may contain provisions that the
  foreign representative
• not have business dealings with competing firms
• not reveal any confidential information in a way
  that would prove injurious, detrimental, or
  competitive to the U.S. firm.
• not enter into agreements binding to the U.S.
  firm and
• refer all inquiries received from outside the
  designated sales territory to the U.S. firm for
  action

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Legal Points to Consider

• How far in advance must the representative be
  notified of the suppliers intention to terminate
  the agreement?
• What is the just cause for terminating a
  representative?
• Which countrys laws govern a contract dispute?
• What compensation is due to the representative
  upon dismissal?

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• Shipping
• Your
• Product

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Shipping Your Product

• When shipping overseas, the exporter must be
  aware of packing, labeling, documentation and
  insurance requirements.
• The merchandise should be
• packed correctly
• labeled correctly to ensure that the goods are
  handled properly and arrive on time
• documented correctly to meet U.S. and foreign
  government requirements and
• insured against damage, loss, pilferage, and delay

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Freight Forwarders

• An international freight forwarder is an agent
  for the exporter in moving cargo to an overseas
  destination.
• These agents are familiar with the export rules
  and regulations of the U.S. and import
  requirements of foreign governments.

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Documentation

• Exporters should seriously consider having the
  freight forwarder handle the formidable amount of
  documentation that exporting requires as
  forwarders are specialists in this process.
• The following documents are commonly used in
  exporting --which of them is necessary depends on
  the country of destination.

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Documentation

• Air Waybill
• Bill of Lading
• Commercial Invoice
• Certificate of Origin
• NAFTA Certificate of Origin
• Inspection Certificate

• Shippers Export Declaration
• Export License
• Export Packing List
• Insurance Certificate

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• Methods of Payment

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Prudent Credit Practices

• Listed in order of risk,
• These are the basic methods for payment
• 1. Cash in advance
• 2. Documentary letter of credit
• 3. Documentary draft or collection
• 4. Open account

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Cash in Advance

• Receiving cash in advance might seem ideal,
  because in this situation the exporter is
  relieved of credit problems. However, for the
  buyer, there is an obvious risk, and exporters
  using this method as sole means of payment may
  find themselves losing out to competitors with
  more flexible financing methods.

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Documentary Letters of Credit and Documentary
Drafts

• These are used to protect the interests of both
  the buyer and the seller. These two methods
  require that payment be made based on the
  presentation of documents conveying the title,
  and that specified steps have been taken .

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Letters of Credit

• A letter of credit adds a banks promise to pay
  the exporter to that of the foreign buyer
  provided that the exporter has complied with all
  the terms and conditions of the letter of credit.
  
• Payment under a letter of credit is based on
  documents, not on the terms of sale or the
  physical condition of the goods.

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Documentary Drafts

• A draft, sometimes called a bill of exchange, is
  analogous to a foreign buyer's check. Like the
  checks used in domestic commerce, drafts carry
  the risk that they will be dishonored. This
  method is more economical than a letter of
  credit, yet still affords the exporter a measure
  of protection.

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Documentary Drafts

• Sight Drafts
• A sight draft is used when the exporter wishes to
  retain title to the shipment until it reaches its
  destination and payment is made.
• There is some risk, however, in that there is no
  bank promise to pay.

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Documentary Drafts

• Time Drafts and Date Drafts
• A time draft is used when the exporter extends
  credit to the buyer. The draft states that
  payment is due a certain time after goods are
  received.
• A date draft differs in that it specifies a
  certain payment date, not a time period where
  payment is accepted.

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Open Account

• In a foreign transaction, an open account can be
  a convenient method of payment, if the buyer is
  well established and has thoroughly been checked
  for credit-worthiness. The risks with an open
  account stem from the absence of banking
  documents. In effect, the buyer gives his word
  that he will pay for the goods/services

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• Selling Overseas

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Business Practices in International Selling

• Keep promises. The biggest complaint from
  foreign importers about U.S. suppliers is failure
  to ship as promised. A first order is
  particularly important because it shapes the
  customers image of a firm as a dependable or
  unreliable supplier.

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Business Practices in International Selling

• Be polite, courteous, and friendly. However, it
  is important to avoid undue familiarity or slang.
  Some overseas firms feel that the usual brief
  U.S. letter is lacking in courtesy.
• Personally sign all letters

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Building a Working Relationship

• Once a relationship has been established with an
  overseas customer, it is important that the
  exporter work on building and maintaining that
  relationship. Since overseas contacts can age
  quickly, it is important that communication be
  maintained.

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After Sales Service

• Service is important in the initial export sale
  and ongoing success of products in foreign
  markets. U.S. firms have many options for the
  delivery of service to foreign buyers. The
  manner in which you deliver is dependent upon the
  product, the country and the capital available.

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What about Importing?

• Importing Into the United States
• This book outlines the procedures required to
  import commodities into the United States.
• http//www.customs.gov
• Other places for assistance
• U.S. Customs-Technical Assistance on
  Requirements, Tariffs, etc. (NOT Promotional)
• Foreign Embassies in Washington, DC
• Trade Associations

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U.S. Commercial Service
The U.S. Commercial Service is part of the U.S.
Department of Commerce, an agency of the United
States government.

• Our mission
• To promote the export of goods services from
  the United States, particularly by small- and
  medium-sized businesses
• To represent U.S. business interests
  internationally
• To help U.S. businesses find qualified
  international partners

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Our Network What it can do for you

• Trade specialists in over 100 U.S. cities and 83
  countries worldwide...

We offer four ways to grow your intl business

• Market Research
• Trade Events
• International Partners
• Consulting and Advocacy

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Our Services Available to You!

• Commercial News USA

• Featured U.S. Exporter
• Market Research
• Gold Key Service
• Trade Counseling Advocacy
• International Partner Search
• Single Company Promotions

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Trade Counseling Advocacy

• Our trade specialists in the U.S. work directly
  with our team of experts overseas in getting you
  all the information and advice that you need.
• We can help you

• Determine the best markets for your products
  services
• Evaluate international competitors
• Identify and comply with legal and regulatory
  issues
• Settle disputes
• Learn about cultural issues and business protocol

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Featured U.S. Exporter - FUSE
A directory of U.S. products and services
featured on the websites of U.S. Commercial
Service offices around the world

• Quick easy online registration at
  http//www.buyusa.gov/home/fuse.html
• Allows company an opportunity to target a
  specific country market in the local language
• Available in over 30 markets

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Gold Key Service

• Pre-screened appointment schedule arranged for
  you before you travel overseas
• Customized market and industry briefings with our
  local trade specialists
• Timely and relevant market research
• Post-meeting debriefing with our trade
  specialists and assistance in developing
  appropriate follow-up strategies
• Help with travel, accommodations, interpreter
  service, and clerical support

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International Partner Search

• 1. You provide your marketing materials and
  background on your company
• 2. Then we use our network of international
  contacts to interview potential partners and
  provide you with a list of up to five
  pre-qualified partners
• Save valuable time and money by working only with
  pre-qualified international partners that are
  interested in selling your products and services.
  
• Obtain high-quality market information on the
  marketability and sales potential for your
  products and services.
• Get all this information in 15 days.

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Single Company Promotions

• The Single Company Promotion service offers
  support and event facilities which will allow you
  to engage your target audience through

• Product launches
• Sales seminars
• Staff training
• Networking receptions

Facilities available include exhibition halls,
auditoriums, meeting rooms, hotels and even the
residences of some US Ambassadors.
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Commercial News USA

• Monthly trade magazine that lists U.S. products
  and services
• Distributed free to more than 400,000 buyers
  from around world
• A proven track record of high-response rates
  and sales results
• Why not advertise and increase your
  international sales..?

Check out www.cnewsusa.com for more information
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What Our Clients Say
Thanks to support from trade specialists at the
U.S. Embassy, we not only saved jobs, but
continue to increase our exports Ford Meter
Box, Wabash, IN
Using the U.S. Commercial Services foreign
market research, we now export to more than 70
countries and have received a presidential award
for our export success. Ampro Electronics,
Los Angeles, CA
In only six months, local trade specialists
helped me get quality distributors covering 13
foreign markets Excel Holdings, Leesburg, VA
Trade shows supported by the U.S. Commercial
Service are a great way to reach the right
foreign buyers Artcrete, Natchitoches, LA
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How to contact us

• April Redmon
• U.S. Department of Commerce
• U.S. Commercial Service-Virginia
• Tel [phone]
• Email april.redmon_at_mail.doc.gov
• www.buyusa.gov/virginia
• www.export.gov