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There is a vast market outside of the confines of the U.S. for U.S. products, both new and used, largely attributable to the expansion in worldwide consumerism brought about by the Internet. Not only has this opened up limitless prospects for client /customer base and sales expansion for U.S.- based manufacturers, resellers, dealers and distributors (not to mention licensors of various technologies, pop-culture logotypes and trademarks and other types of "cachet-laden" brands and intellectual property), but the Internet itself has created a portal for virtually any ambitious company, even the most inexperienced and bumbling (you know who you are!) neophyte organizations, to have its own virtual division for international trade, globalism and export. And all of this can be achieved via telephone, email and a simple Internet website presence. The time-consuming and very expensive (and speculative) travels about the globe for meetings with people in other markets and countries are no longer barriers to entry. Virtually any company a product worth selling, can become rapidly established as an exporter and build revenues, broaden and diversify client base, and even achieve international brand recognition!
There is very little in the way of entry cost to become a significant participant in the vast global corporate and direct consumer markets. Much of the required expertise and logistical work can be comfortably and safely outsourced contractually either domestically or abroad. For those of you who are ardent U.S. patriots (and not shameless, self-promoting mercenaries, like myself), you also have the comfort of knowing that export is very, very healthy for: the stability and prosperity of the domestic economy at large; the value of the U.S. dollar in world currency markets; the Balance of Trade, the Balance of Payments, the GDP and domestic employment. In certain cases, the federal government, as well as state and local governments and their innumerable agencies and bureas even offer advice, contacts, economic assistance and tax incentives to exporters.
This post is actually a preamble to the next post, which will be chockablock (a word that nobody should use) with live links to helpful sites and resources for neophyte exporters. While you will want to keep this (today's) post handy in order to get yourself primed to initiate the course of action necessary to assure your success (and minimize your risk) in creating a corporate "virtual export division", the next posting (which should be up on or before 21 November 2006) will contain links that YOU WILL WANT TO CHECK DAILY. I have chosen to do this by imbedding the links right in the site posting (along with their descriptions) rather than establishing them as permanent links to this site itself, which would eventually become overwhelmingly cumbersome.
IT MIGHT BE ADVISABLE TO EITHER BOOKMARK THIS BLOG, OR TO ADD IT TO YOUR FAVORITES LIST RIGHT NOW TO REFERENCE IT AND USE IT AS A RESOURCE DAILY! (THIS IS ACTUALLY A CLEVER SEARCH ENGINE POSITIONING STRATEGY FOR MY BENEFIT BEING INNOCUOUSLY PRESENTED AS A "HELPFUL IDEA").
The checklist below is provided in order to help you to be certain that you have all of the fundamental bases (I cannot stand that cliche) fully covered. *** Also, please allow me to add that I am not providing any tax, legal accounting, financial or investment advice in providing this information. I recommend that you always seek the advice of competent legal and tax counsel before pursuing andy significant business strategy, or prior to entering into any type of business transaction, relationship or agreement.*** A "know-it-all" uncle will not suffice for this purpose. On to the Checklist:
1. IDENTIFY YOUR PRODUCT, AND/OR YOUR COMPANY AND THE SERVICE THAT IT PROVIDES IN ALL OF ITS UNIQUE ASPECTS, AND IN ITS POTENTIAL MERCHANTABILITY OVERSEAS. Know your unique strong points, know your competition, and learn about the markets in other countries where you might find your new clients and customers. In my next post, I will give you places to find data about what is being sold to whom by whom globally. It is easier to exploit an emerging market than to try and initiate a demand for your product. Find existing markets -- don't try to create them yourself....this latter pursuit can be exceedingly expensive and risky. It is better to exploit or expand an existing, growing foreign market than to try to develop a demand.
2. PREPARE EXCELLENT DOCUMENTATION DESCRIBING THE PRODUCT, WITH ALL OF ITS UNIQUE ASPECTS AND ATTRIBUTES. ALSO, A VARIETY OF HIGH RESOLUTION PHOTOGRAPHS SUITABLE FOR WEBSITE POSTING COULD PROVE TO BE A POWERFUL DRAW AS WELL AS A COMPETITIVE EDGE. USE PLAIN LANGUAGE, AS WELL AS ANY NECESSARY TECHNICAL TERMINOLOGY WHEN YOU ARE PRESENTING YOURSELF AND YOUR PRODUCT TO THE GLOBAL MARKETPLACE. AS MY COUSIN LLOYD USED TO SAY (WITH ALTOGETHER TOO MUCH FREQUENCY), "THE BIGGEST FINANCIAL DECISIONMAKERS UNDERSTAND A GOOD BUSINESS PROPOSITION, BUT THEY ARE NOT NECESSARILY CONVERSANT IN THE TECHNOLOGY. DON'T GET TOO TECHNICAL. KEEP IT SIMPLE..." LLOYD COULD PRATTLE ON ABOUT THINGS LIKE THAT FOR HOURS. BUT THEN AGAIN, YOU NEVER KNOW WHERE (AND FROM WHOM) YOU'LL ACQUIRE WISDOM. As I recall, Lloyd also is the one who said, "Don't ask a blind man to match your clothes for you." What a bore. But very intelligent, in a folksy way.
3. BE PREPARED TO EMPLOY THE SERVICES OF A HIGH-QUALITY WEBSITE DESIGNER, WEBMASTER AND A RELIABLE HOSTING COMPANY. YOUR VIRTUAL EXPORT DIVISION WILL NEED TO BE WELL-PRESENTED, INFORMATIVE, EASY TO NAVIGATE AND EXTREMELY USER-FRIENDLY. THE MORE EASILY UNDERSTANDABLE AND CLIENT- INTERACTIVE, THE BETTER. You may eventually wish to retain the services of some emarketing and Search Engine Optimization gurus in order to help secure and then retain your high rankings and search engine dominance. Some of these gurus tend to get a bit more excited about the form of the website (e.g., the flashy graphics, et cetera) than the substance. A suitable site will take a cooperative effort, and some reciprocal education.
4. YOU WILL NEED TO BECOME FAMILIAR WITH THE STANDARD INTERNATIONAL TERMS OF TRADE AS ESTABLISHED BY THE INTERNATIONAL CHAMBER OF COMMERCE (the "ICC", in Paris, France). THE KEYWORD CATEGORY FOR ALL OF SUCH TERMS IS "INCOTERMS", AND THEY ARE NOT THAT COMPLEX. Incoterms include the understandings, undertakings and proper documentation of all aspects of the international trade transaction, including, but not limited to: purchase terms/ terms of sale; bank intruments and Letters of Credit to guarantee the creditworthiness of a foreign buyer, as well as to make certain that the goods are shipped in conformity with the purchase order; shipping documents and bills of lading, warehousing receipts and other documents regarding arrangements having to do with which party becomes responsible for the value or the replacement the products shipped at what time, and when responsibility is transferred from seller to purchaser. A good international freight forwarding company can help you with the prototypes for some of these documents, and can actually coordinate the logistics and fulfillment processes.
5. YOU WILL NEED YOUR INCOTERMS SET FORTH ON DOCUMENTS EXPERTLY DESIGNED BY YOUR COMPANY (IN CONJUNCTION WITH LEGAL COUNSEL'S REVIEW AND POSSIBLE AMENDMENTS) WITH ITS LOGO ON DOWNLOADABLE "FILL-IN-THE BLANKS" - TYPE FORMS WHICH THE CLIENT CAN ACTUALLY FILL OUT ON THE INFORMATION ON THE COMPUTER SCREEN AND INSTANTLY EITHER EMAIL DIRECTLY FROM THE SITE, OR PRINT OUT THE BLANK FORM, FILL IT OUT OFFLINE AND SCAN OR FAX THE PREPARED FORM TO YOUR DESIGNATED EMAIL OR FACSIMILE ADDRESS. Once again, a good international freight forwarder can help with a great deal of both the required documentation and with virtually all of the logistics and fulfillment processes. A drop-down document program like downloadable Adobe Acrobat is usually excellent for this type of on-line, pre-prepared customer forms.
6. DEVELOP A SHORT LIST OF VIABLE AND RELIABLE FREIGHT FORWARDERS, to assist you with documentation, warehousing, domestic shipping, and international transport by surface or air.
7. DEVELOP A SHORT LIST OF PROVIDERS OF TRADE FINANCING. Trade financing is the key component of every international transaction involving a sale and purchase of goods. By definition, trade financing entails any or all of the following: guarantees of customer (e.g., your importer) payment upon your fulfillment of your obligations as the exporter (for example, Letters Of Credit, third-party escrow arrangements or international credit insurance policies); use of your buyer's Letter Of credit or purchase order (usually with some other type of third-party guarantee or credit enhancement attached) to secure your payment to your vendors in connection with the specific purchase order. In the classic but highly simplistic situation of a U.S.-based exporter of machinery who stands to make a gross profit of 500,000USD by simply buying a product from a local supplier for 1,000,000USD and re-selling it, via export, to a foreign purchaser at a marked-up price of 1,500,000 has only one problem (he might have more than one, but that really isn't our business, now, is it?)...his supplier wants to be unconditionally assured of being paid the full 1,000,000USD prior to even considering letting the machinery leave his warehouse. If the exporter is a thinly-capitalized company, or has a limited (a euphemism for "spotty") credit history, he will need to procure the 1,000,000USD, or find a credit-viable guarantor for the full payment, before he can even make delivery to his purchaser. If the exporter is a clever soul, he will obtain Purchase Order Financing, whereby his purchaser's payment instrument or guarantee is utilized to collateralize payment to the vendor. At the risk of hurting feelings, don't waste time with your banker asking about trade financing in any form...in many cases, he or she will not even understand what you are asking about...in a few exceptional cases where your local has had sufficient coffee to comprehend your intentions, he or she will possibly consider your request to the extent that you have unencumbered equity in your residence. Lamentably, most trade financing comes from non-bank lenders, such as factors, finance companies, specialized purchase order finance companies, a few governmental agencies and other sources (refer to the "know-it-all-uncle" briefly mentioned above, at the end of the legalese disclaimer section). Generally speaking, this type of financing tends to be expensive, so you must have a healthy margin of profit in your transaction in order to make it worth your while. In the next post, I will discuss the best sources of this mysterious trade financing, what they will be looking for from you, how to contact them, and what to say. As a practical matter, financing a large number of "small-ticket" orders to foreign customers is, in terms of percentage off of your anticipated gross profit, more expensive than financing a smaller number of much "larger-ticket" orders to a smaller number of customers. Either way, every sensible and lawful export transaction or group of transactions is financeable through some means. It is just a question of knowing where to go, and what to say. Also, it is generally a good idea to be polite.
7. CULTIVATE GOOD RELATIONSHIPS WITH RELIABLE VENDORS AND SUPPLIERS. Occasionally, these people can turn out to be excellent, pro-active partners, sources of information, and even providers of credit. Vendors can be wonderful allies.
8. BUILD AN INTERNATIONAL NETWORK OF "LOCAL" LIMITED AGENTS, DISTRIBUTORS OR INDEPENDENT REPRESENTATIVES IN THE COUNTRIES TO WHICH YOU ARE EXPORTING. Not only are these folks an originating source of purchasers and business for your company, but they are an invaluable source of diplomatic support because of their familiarity with the local culture and customs. Often, glitches in otherwise sensible business deals can be worked out with these motivated foreign-based Human Assets acting as ambassadors. As they say in Business School, "Sell globally, but form alliances with the locals." (I may be paraphrasing here...)
9. COMMUNICATE CONSTANTLY WITH CUSTOMERS (PROSPECTIVE AS WELL AS EXISTING CLIENTS), VENDORS, SOURCES OF FINANCING AND OTHER PERSONS OF KNOWLEDGE AND INFLUENCE WITHIN YOUR INDUSTRY. YES, EVEN COMPETITORS! Investigate and stay current in terms of all relevant international affairs (political, regulatory, technological and economic) which may concern your business, including anything which may be of interest or importance to your domestic vendors or your foreign client base. Constantly monitor changes in the "TRADE TEMPERATURE" of every country to which you may export your products.
At next posting, I will present you (yes, you!) with live links to various providers of all of the components mentioned in the above checklist , as well as other indispensable information. Thank you for staying tuned. By the way, exporters qualify, at least in my book, as Internationalists of the Highest Order. Export and Import businesses are the grassroots keys to better, more profitable and peaceful international relations.
Faithfully, And In Friendship
Douglas E. Castle,
Internationalist
