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Export Strategy Contents

Developing Export Strategy

Direct Exporting
Manufacturer’s Representative or Sales Agent
Foreign Distributor / Importer
Overseas Retailers
Central Trade Offices and Trading Companies

Indirect Exporting
Domestic Intermediary
     Export Management Company (EMC)
     Export Trading Company (ETC)
         Advantages of Using EMCs / ETCs
         Potential Disadvantages of Using an EMC / ETC
Overseas Intermediary
     Licensing
     Franchising
     Contracting
Other Intermediaries
     Piggyback Marketing
     Export Merchants
     Corporate Presence

Alternative Distribution Approaches
Joint Ventures
Strategic Alliances
Subsidiaries

Finding Trade Leads
Government Agencies & Sources
     Unites States Department of Commerce (DOC)
     Unites States Department of Agriculture (USDA)
       Unites States Agency for International Development (USAID)
     Unites States Trade Development Agency (USTDA)
State and Local Governments
Private Agencies and Sources
Television and Motion Pictures
Electronic Media

Finding an Overseas Representative
Agent or Distributor?
     Use and Agent
     Use a Distributor
Compile Potential Representative List
Government Assistance Programs
Private Agencies and Sources
Electronic Resources and Other Media
Contacting Potential Representatives
Evaluating Potential Representatives
Background Information on the Representative
Third Party Evaluations
Bank and Trade References
Current Business References
World Traders Data Report and Commercial Credit Reports
Draft and Execute Agreements

Managing and Motivating Distributors
Quality Products and Exclusivity
     Quality Products
     Exclusivity
Sales, Prices and Profit Potential
     Pricing
Effective Communications
     Periodic Visits
     Updates
      Correspondence
Training
After-Sale Service
Collaborative Work Effort
Recognition and Sales Conferences
     Recognition
     Sales Conferences

Pursuing International Bid Opportunities
Multilateral Development Banks (MDBs)
     The MDB Project Cycle
     Participating in MDB Financed Developments
Unites States Agency for International Development (USAID)
Other Agencies and Programs
     Unites States Trade and Development Agency (USTDA)
     United Nations (UN)
     Defense Security Cooperation Agency (DSCA)

Traveling to Overseas Markets
Travel Documents
Medical Preparation
Cultural Factors
Target Market Distinctions

Cultural Business Variables
Cultural Negotiating
Travel Tips

Promoting the Product
Campaign Control
     Centralized Promotional Efforts   
     Decentralized Promotional Efforts
Means of Advertising
     Direct Mail
     Media Advertising
     Trade Fairs, Trade Missions, and Catalog Exhibitions
     Multilateral Development Banks (MDB)
     Web Marketing: Search Engine Optimization (SEO), Search Engine Marketing
     (SEM), Social Media / Social Networks

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To review course tables of contents and to register for individual courses or the Complete Package, please visit the Export Institute.

Developing Export Strategy 3/3

Traveling To Overseas Markets
Careful planning and preparation will maximize the effectiveness of your overseas trip, minimize your expenses and make efficient use of your time. Travel plans should take into consideration the normal work days and business hours in the country to be visited and be scheduled around foreign holidays, international vacation schedules, and religious holidays. Obtain World Commercial Holidays, published yearly in Business America, from your DOC office for more detailed information.

Keep free time in your schedule to allow for unplanned meetings and unexpected circumstances. Use extra time for research, planning, telephone contacts, or summaries of prior meetings. Take time to shop the competitive market, gain insight to business opportunities, and orient yourself to economic realities.

Travel Documents
A valid U.S. passport is required for all travel outside the United States and Canada. To obtain a passport, citizenship is required along with proof of identity, two identical passport photos, a completed application form and fees.

U.S. citizens who travel to a country where a valid passport is not required will need documentary evidence of their U.S. citizenship and identity. Proof of U.S. citizenship includes an expired passport, a certified (original) birth certificate, Certificate of Naturalization, Certificate of Citizenship, or Report of Birth Abroad of a Citizen of the United States.

Many countries require a visa. Plan on two to three months in advance for processing of your application, photographs, and visa. Apply for a tourist or multiple entry visa. It is more easily obtained than a business visa which is unnecessary unless you plan to physically sell, transfer goods, or earn money. Securing a visa from some countries can be a difficult task. Some countries require an invitation from the business contact in that country.

An international drivers license is a separate document and does not replace the need for a valid U.S. driver's license. More information can be obtained from the Office of Passport Services in Washington, D.C. (202-647-0518)

For more information on entry requirements by country and travel documents, check the international travel tips in the U.S. Department of State, Bureau of Consular Affairs web site, as well as the Western Hemisphere Travel Initiative. For additional information about travel documentation and tips visit A Basic Guide to Exporting. For safe travely security information visit Transportation Security Administration.

Medical Preparation
Check with health care providers and your records to ensure immunizations (e.g. tetanus and polio) are up-to-date. Preventive actions are the best protection against most health risks involved in traveling abroad, especially in developing countries.

Some countries may require international certificates of vaccination. Requirements for vaccinations differ from country to country. Investigate the need for immunizations or other preventive medicine against regional diseases you may encounter. Some of these treatments must be started weeks before you begin your trip. No immunizations are required to return to the U.S.

Some medical problems can be prevented before departure. For facts related to health conditions in the country you will be traveling to visit U.S. Department of State, Bureau of Consular Affairs, International Travel Health Tips and the Traveler’s Health section of the Center for Disease Control. Detailed health information is included also in Health Information for International Travel, available from the U.S. Government Printing Office.

Cultural Factors
Understanding and respecting cultural, social, and business customs will prepare you for the flexibility needed to adapt to profitable international business ethics and practices. Lack of cultural awareness can be detrimental to the success of a company's position in the foreign market. Wells (Exporting from Start To Finance, 1995) suggests a quick, in-flight review of the Culture Grams, developed by Brigham State University's Center for International Trade. Over 100 countries and their special cultural considerations are identified in separate leaflets. Bookstores and libraries are also an excellent resource for historical and cultural information.

Target Market Distinctions
The Checklist For Your Overseas Trip includes specific marketing data that should be considered for your overseas visit. Determine the cultural differences of each market when evaluating information incorporated in the checklist documents. Proper knowledge of business manners and methods for your target market will protect the transmission of your company goals, objectives and business agendas.

Use foreign country marketing plans to compare social customs within potential markets before engaging in business conversations. Pay close attention to business styles, cross-cultural communication, and the degree of importance a foreign distributor places on developing business relations.

The potential of your foreign market can be maximized by using marketing resources to obtain a better understanding of consumer buying habits, business practices and management cultures.

Cultural Business Variables
Cultural sensitivity is critical to the success of your international travel. Let your host set the tone of your initial meeting. Pay close attention attitudes towards gift-giving, accepted form of greeting, business relationships, small talk and smoking. Misunderstanding these customs may embarrass both you and your host. If there is a language barrier, be sincere, but let the product speak for itself.

International business executives often carry confusing titles. When meeting your prospective customer or distributor, be careful interpreting the correct use of business titles, surnames, and first names. There is often a distinction between formal occasions, business meetings, and written communications.

Cultural Negotiating
There are additional characteristics and approaches to consider when negotiating international business deals. Wells (Exporting from Start To Finance , 1995) confirms the availability of the many principles, details and nuances you can use. The best strategy is to study what you can, when you can, with attention to logical priorities based on the importance of the deal and the immediacy of the need. Even though you may never perfect your cultural style for each foreign market, major offenses can and should be avoided.

Before you make your overseas trip, certain negotiating tactics, business fundamentals and issues should have been discussed with your company. Know these basic issues and how far you can deviate from the agreed upon concepts. Be aware of the least amount you can agree upon as well as concessions you can make during negotiations. Don't lose sight of the ultimate goal, make a deal that is best for you, your company, and the distributor.

Travel Tips

  • Change money at the airport of entry, it is usually better than the rate at your hotel or from an inner city bank.

  • Plan ahead for a translator or hotel operator to help make telephone contact to confirm or schedule appointments.

  • Try and skip taxis as your method of transportation from the airport. Arrange for hotel/airport transportation in advance. Taxi rates are usually higher and operators can be intimidating.

  • Select business, deluxe or first class hotels that offer business services for patrons. These services can include communication systems, translators, and general business information that relates to your target market.

  • Try to travel with others when possible.

  • Make a list of all the documents you are carrying in case of loss or theft. Have all the applicable numbers ready for replacement purposes. For instance, photocopies of your itinerary, reservations, passport, medical and eyeglass prescriptions, airline tickets, traveler's checks, and credit cards are recommended.

  • Proper clothing, sunscreen, and insect repellent is very important, not only for comfort, but to avoid more serious health hazards.

Your conduct during negotiation, overseas travel and even your choice of hotel characterize the image you portray for your company and product you are trying to sell.

Promoting the Product
The advertising effort actually begins as you make your first contacts with potential overseas representatives and introduce your company and product to target markets. In these early stages, you are beginning to establish your image This image is further refined by your negotiation and selection of your designated representative. Your conduct during negotiations and during foreign travel, even your choice of hotels, will characterize the image you are presenting.

There are two major considerations that must be addressed early in your selection of an advertising program. First, you must decide who will control the advertising campaign, you or your overseas representative. Second, you must evaluate and implement the most appropriate methods.

Frequently, there will be no "black and white" result from your evaluations. The promotional effort is often a collaboration between the exporter, his representative, and an advertising agency. A variety of advertising methods may be utilized to reach different aspects of the selected market.

Campaign Control
The promotional campaign can be either centralized (under direct control of the exporter) or decentralized (under the control of the overseas representatives). Each method has its advantages and disadvantages.

Centralized promotional efforts:

  • Control of all promotional efforts, logos, advertising messages by the exporter.

  • Uniformity of the company image and advertising message to all markets.

  • Economies of scale in maintaining one headquarters operation, minimizing duplication of efforts.

Decentralized promotional efforts:

  • Each market is different and local experts may have the best understanding of it and the best methods to promote the product.

  • U.S. ad agencies may not be strong or experienced in some overseas markets.

  • There is more flexibility in the selection of local advertising agencies.

  • Local regulations, customs, and taboos are more clearly understood.

As a beginning exporter, you will probably use the decentralized approach because you will be starting in one or a limited number of markets and require local expertise.

As your markets expand or become more numerous, a more centralized approach with greater control and potential cost savings will become feasible. U.S. advertising agencies can often affiliate with local firms to assure knowledge of the local market and effectiveness of the promotional effort. Larger U.S.companies such as Coca-Cola, Kodak, and IBM prefer this approach which gives them maximum control.

No matter which means you select, close collaboration with your representative and constant communication is essential not only in determining the focus of your marketing effort, but also in monitoring and evaluating it.

Means of Advertising
A variety of methods and agencies are available to assist in your marketing effort, many of which you may be using in you domestic efforts. However, there are a number of methods that will help you advertise internationally. Some may be best utilized in a general sense, while other may be focused and specific to selected target markets.

The following list represents the major methods:

Direct Mail
You may be conducting your direct mail campaign ahead of, or as part of your effort to locate an overseas representative.

Leads for direct mail can come from foreign trade and technical journals, trade association publications, responses to advertisements, or subscriber lists. Subscriber lists are often available from the publications, list brokers, or from direct mail consultants. Trade shows and the contacts generated can also form a source of mailing lists.

Specific mailing lists of screened prospect customers are prepared by the DOC through its Export Contact List Service, which collects data from its automated worldwide file of foreign firms. Information includes key contacts as well as addresses and telephone numbers.

Media Advertising
Media advertising is broader in scope than other methods. Television, video, and radio are general in their scope but well adapted for consumer products. A more specific approach, particularly for commercial products, is available through print media oriented towards specific markets such as:

  • Trade Journals - Many foreign buyers find business through advertisements in trade journals.This provides a screening function to narrow the focus of an advertising campaign.

  • Commercial News USA This US&FCS publication and EBB promotes American products overseas by distributing it to consulates and embassies. CNUSA reaches up to 110,000 potential buyers.

  • Trade Association Newsletters and Publications - Not only can U.S. trade association publications be used to promote your product, but also their foreign counterparts.

Whenever media advertising is used, make an effort to have it translated effectively in the local language. Screen it for conformance with the foreign country's customs, regulations, and note taboos or idiosyncrasies.

Trade Fairs, Trade Missions, and Catalog Exhibitions
There are several levels of international business events held both in the U.S. and abroad. These are frequently organized by state and U.S. government agencies, as well as trade associations and Chambers of Commerce. Some of the more prominent programs are:

  • Industry-organized Domestic Fairs and Exhibitions - Most major industries in this country have their own organization, often arranging regular exhibits of their member's products and services. Many attract potential foreign buyers

  • Trade Shows and Trade Missions - Organized by the DOC, Chambers of Commerce, or trade associations they are an excellent opportunity to showcase your product and make valuable contacts.

  • Matchmaker Events - Often oriented to new-to-export firms, they attempt to more closely align the exporter to prospective contacts and markets.

  • Catalog and Video/Catalog Exhibitions - are a relatively low cost advertising method. Other DOC programs include those of the Export Development Office, Major Projects program and Textile and Apparel Export Expansion program. Contact your local DOC office for further details.

  • Foreign Agricultural Service (FAS) of the Department of Agriculture (USDA) The U.S. Exporter Assistance division offers trade leads, buyer lists, and other marketing programs. Visit their web page for regional contacts that can assist you promote your food and agricultural products in the global marketplace. Go to section Finding Trade Leads - United States Department of Agriculture (USDA) on page 1 for information referenced earlier in this chapter.

Careful planning and follow through are necessary when using methods requiring overseas travel due to the expense. The right event must be selected, materials and translators prepared and adequate follow-up assured.

Multilateral Development Banks (MDB)s
A number of firms have entered foreign markets by bidding on or subcontracting to bidders of Multilateral Development Bank projects. This has as its advantage a large degree of exposure while offering opportunities for immediate business. There are five main Multilateral Development Banks and their activity level has increased significantly in recent years. Go to section Pursuing International Bid Opportunities - Multilateral Development Banks (MDB)s on page 2 for information referenced earlier in this chapter. (p. 16)

Web Marketing: Search Engine Optimization (SEO), Search Engine Marketing (SEM), Social Media / Social Networks
Search engine optimization (SEO) is the process of improving the volume or quality of traffic to a web site or a web page (such as a blog) from search engines via "natural" or un-paid ("organic" or "algorithmic") search results as opposed to other forms of search engine marketing (SEM) which may deal with paid inclusion. The earlier (or higher) a site appears in the search results list, the more visitors it will receive from the search engine. SEO may target different kinds of search, including image search, local search, video search and industry-specific vertical search engines. This gives a web site web presence.

As an Internet marketing strategy, SEO considers how search engines work and what people search for. Optimizing a website primarily involves editing its content and HTML and associated coding to both increase its relevance to specific keywords and to remove barriers to the indexing activities of search engines.

Social media marketing is the use of social networks, online communities, blogs, wikis or any other online collaborative media for marketing, sales, public relations and customer service. Common social media marketing tools include Twitter, LinkedIn, Facebook, Flickr, Wikipedia, Orkut and YouTube.

In the context of internet marketing, social media refers to a collective group of web properties whose content is primarily published by users, not direct employees of the property (e.g., the vast majority of video on YouTube is published by non-YouTube employees).


Social media marketing has three important aspects:

  1. Creating buzz or newsworthy events, videos, tweets, or blog entries that attract attention, and become viral in nature. Buzz is what makes social media marketing work. It replicates a message through user to user contact, rather than the traditional method of purchasing of an ad or promoting a press release. The message does not necessarily have to be about the product. Many successful viral campaigns have gathered steam through an amusing or compelling message, with the company logo or tagline included incidentally.

  2. Building ways that enable fans of a brand or company to promote a message themselves in multiple online social media venues. Fan pages in Twitter, MySpace of Facebook follow this model.

  3. It is based around online conversations. Social media marketing is not controlled by the organization. Instead it encourages user participation and dialogue. A badly designed social media marketing campaign can potentially backfire on the organization that created it. To be successful SMM campaigns must fully engage and respect the users.


Social network marketing or social level marketing, is an advertising method that makes use of social network service and to increase their web presence. This ranges from simply advertising directly on social networking sites, viral marketing that spreads throughout the web, email, and word of mouth, or providing niche social networking sites focused around the item being advertised.

Many sites include features where companies can create profiles. Companies sometimes invest in internet presence management, which can include social network marketing.

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Developing Export Strategy 2/3

Government Assistance Programs
Go to section Finding Trade Leads - Government Agencies and Sources on previous page for information referenced earlier in this chapter.

Private Agencies and Sources
Go to section Finding Trade Leads – Private Agencies and Sources on previous page for information referenced earlier in this chapter.

Electronic Resources and Other Media
Several programs can be accessed through the Web and will be instrumental in your distributor search. You may also have some success using directories at a library with an extensive international business section. Have the librarian locate directories of importers for the specific countries you are interested in and scan them for products for your particular industry.

Contacting Potential Representatives
Having obtained a list of contacts of potential representatives, the next step is to establish contact to determine those who might be available and have interest in acting in that capacity. The best method is the face to face contact which is available during trade shows, trade missions, and foreign travel. If this is not practical, communicate remotely utilizing the latest technologies available to you.

Use this sample as a guide in developing your own communications under the review of your legal counsel. If the communications can be drafted in the language of the foreign country, that will be even better. Initial communications should convey the following, at a minimum.

  • Background information on your firm

  • Information regarding your product

  • Type of sales representative you are seeking

  • Available information regarding your target market and/or end user

  • Deadline for securing representation in the local market

Don't make an offer or imply a contract; instead your communication should be a solicitation for a proposal. Keep track of your communications and responses. If you do not have a response from your contact within a few days of your first efforts, send a reminder.

Evaluating Potential Representatives
The arrangements you make with your representative are critical to the success of your marketing efforts. You want to know as much as possible about your contacts to make informed decisions and assure mutual compatibility. You should consult the following information when available:

Background Information on the Representative
The more information available to you on a prospective representative, the better. At least, you should find out about the following, which is mostly available in their web site if they have one:

  • Company letterhead and web site

  • History and experience, particularly with similar products or industry

  • Qualifications of principals and/or officers

  • Adequacy of personnel, facilities, and resources

  • Availability of the resources to meet your requirements

  • Current sales volume and size of inventories

  • Territories they cover

  • Product lines they carry (including competing or complimentary products)

  • Customer base

  • Current clients

  • Past performance

  • Familiarity with U.S. business practices

  • Nature of sales force

  • Media resources

Third Party Evaluations
Often, evaluations are made by independent companies and agencies. Several reports are published by Dun and Bradstreet and Graydon.

Bank and Trade References
The relationship a contact has with his bank, as well as the extent and nature of credit availability, types of accounts, and history, are often indicative of the prospect's business practices and history. Additionally, trade contacts such as suppliers, shipping agents, customs brokers, etc. can provide valuable background regarding the history, strength, integrity, and reliability of the contact.

Current Business References
One of the best ways to explore how you might expect a relationship to proceed can be indicated by those that your prospective representative has current business relationships with. These can be other exporters currently utilizing this source, accountants and legal firms, and industry and trade associations.

World Traders Data Report and Commercial Credit Reports
Credit reports are often available from commercial sources such as TRW Credit Report They can provide information regarding your contact's financial strength, payment histories, and other relevant financial data. The DOC prepares the World Traders Data Report which focuses on the background, number of employees, types of product handled, and years in business.

Draft and Execute Agreements
After selecting your representative, the next step is to draft and execute a definitive contract or agreement as a basis of documenting your understandings and responsibilities. This must be done in concert with your legal counsel due to its importance to the relationship with your representative and your legal liabilities both in the U.S. and in the foreign country.

As a general rule, the following items should be included in every agreement:

  • Names, addresses, nature and relationship of parties

  • Product description

  • Definition of territory

  • Exclusivity conditions

  • Basis for compensation

  • Product pricing agreements

  • Sales goals and market share expectations

  • Nontransferability of assigned rights

  • Confidentiality agreements and understandings regarding prohibitions in dealing with competing products

  • Jurisdiction regarding agreements and their enforcement

  • Responsibilities for advertising, ordering, inventories and delivery, maintenance, warranty work, and other relevant operating concerns

  • Term of the agreement and provisions for modification, cancellation, extensions, or renewal

Consultation with your legal counsel is critical in any written contract. Since legal systems, customs, and regulations differ throughout the world, co-counsel knowledgeable in the practices of the foreign country may also be necessary. Contracts and agreements can be quite extensive but must be as thorough as possible to preclude misinterpretation of intent and subsequent controversy. Due to the dynamics of relationships as well as marketplaces and global politics, modifications will probably be required over the life of the agreement and you should be prepared for that necessity.

Managing and Motivating Distributors
Successfully managing your distributors is a top priority for profitable international trade. If your linkage to international commerce is through your distributor, he or she represents your company. When your distributor prospers, you prosper, if you provide quality products with profit potential. The key components outlined below motivate the distributor to work with you. Always keep in mind that it is a two-way relationship with reciprocal expectations.

Quality Products
If a product is defective after it is sold, the distributor incurs both a monetary cost and an opportunity cost. The inconvenience goes beyond the time involved to ameliorate return and replacement factors. Regardless of the fact that you will replace the product at no cost, handling defective parts can be very costly in foreign trade due to shipping and duty fees.

Your quality products should be:

  1. Trouble free and carry warranties.

  2. Unique to the intended target market.

    • Modify when necessary and stay ahead of competitors within the target market.

  3. Delivered with appropriate, quality packaging.

    • Use proper language, colors, symbols and designs that are suitable and inoffensive in your market.

  4. Supplied with high quality advertising and sales promotion techniques.

    • For example, catalogs, brochures, display cases, banners, window cards, illuminated signs and fliers can be provided in lieu of advertising dollars.

  5. Accompanied by easy to understand user manuals, information or instructions.

  6. Patent or trademark protected.

    • It is your responsibility to take legal action against counterfeit merchandise brought into the target market and ensure your product will not be illegally imitated.

Exclusivity
Your distributor will want exclusive rights to your product with full control over his or her geographic territory. However, you cannot guarantee that sales to third or fourth parties in the U.S. will not find their way into foreign markets. You cannot terminate an agreement with a U.S. customer simply because they resold your product in a foreign market.

One way to counter the inability to guarantee absolute exclusivity is to offer lower, preferential prices. You can also make a commitment to work with the foreign distributor to resolve problems of interference from competitors while discussing exclusivity of your product in advance.

Sales, Prices and Profit Potential
A good distributor will have business expansion plans. Focus on the distributor's sales, not his purchases from you. Increasing sales and profit growth are essential to business expansion. Accurate sales records signal market trends and slumps that help you stay ahead of the rest of the competitors in the marketplace. Compare sales growth records to other market indicators such as inflation, GNP, and data on consumer purchases.

Motivate your distributor with reasonable payment terms that include periodic requests for payment delays. Temporary payment terms during an economic slump or natural disaster is an effective way to build good will and establish loyalty.

Managing advertising and sales promotions is also a critical factor of basic planning and forecasting. With your assistance, your distributors should develop periodic marketing plans. A marketing plan is necessary from your distributor so you can properly plan for advertising, sales promotions, and seasonal buying patterns. You can help your distributor plan for special sales and new product introductions as well as competitive trade-in programs.

Pricing
Sales and profit potential are the responsibility of the distributor. It is his responsibility to know the unique characteristics of his territory and be able to sell your product profitably within the existing system and methods of his market. In return, the distributor expects you will offer him the lowest price possible because:

  1. The best competitive advantage in the market place is the lowest price.

  2. He will have to take on some of your normal selling costs.

  3. Your product accumulates additional price increases as a direct result of overseas transportation, duty and distribution fees.

  4. Price discounts can be based upon the annual sales volume by the distributor, a single, large purchase order, cash payments, or large contract/sales opportunities.

Effective Communications
Build strong overseas relationships through effective communication. Two important communication factors should be considered when managing and motivating your international distributor are:

  • Your personal relationship with the distributor. Establish a relationship with the top person. That person has the power to make major decisions and effect change.

  • The cultural differences between countries, including socially acceptable practices, work ethics, language, religion, business ethics, attitudes, and values.

Periodic Visits
Overseas travel is the only way to fully understand your foreign target market and foreign distributor. Relying on electronic or written communication can negate the factual evidence provided by on-site visits, research and interviews.

Distributors expect you, your technical experts, developers, and managers to visit their market. Spend several days learning about the problems and opportunities in that particular market. Utilize direct sources of information, attend trade shows, visit with top management, and be sure to include some contact with the end customer.

Updates
Establish a communication plan that:

  • Keeps your distributor informed.

  • Provides periodic new information about your product, company or industry.

  • Follows the 24 or 48 hour rule of responding. Always get back to inquiries and complaints within two days.

  • Avoids miscommunication by providing frequent information regarding invoicing, commissions, competitive updates and market analysis.

  • Informs your distributor of primary sources of help and information for opportunities with specific products.

Correspondence
A vital component of communication is quick response. The worst action you can take in international trade is no action. Timely and accurate administration of correspondence is expected not only with you but also your co-workers and managers. It can be in the form of:

  • Personal visits

  • Phone/fax

  • Email and regular mail

  • Online collaboration tools, social networks and other electronic communications

  • Telecommunications

The most widely accepted language is English, however for most of your distributors English will be a second language. This makes effective communication a requirement to overcome language differences.

Training
Training support and materials will be expected by your distributor for the operation and sales features of your product. These materials can take many forms: pamphlets, brochures, catalogs, fliers, manuals, videos, onsite training visits, and slide presentations. Sales force training should include product and application knowledge, sales skills, and basic market research elements that identify customer profiles and product competition.

The same support expectations apply towards after-sales service and repair methods. Technical training to support after-sales service in the exporting country should include:

  • Troubleshooting

  • Repair and Testing Procedures

  • Repair and Complaint Reporting

  • Warranty Program

After-Sale Service
There are three basic options for providing after-sales support:

  1. Train and assist your distributor to provide service.

  2. Train an independent agency to provide service.

  3. Relocate your own staff to service the foreign market.

These after-sales service departments cfan be structured to be profitable depending on market factors. However, a fast and efficient service operation will reduce additional costs to the end user while keeping a competitive advantage in the foreign market.

It is to your benefit to have a flexible and swift repair system. Plan for spare parts and replacement items which may cost your distributor in the form of additional freight and/or duty fees.

Collaborative Work Effort
Motivating and managing your distributor should generate a two-way relationship, in which both parties expect certain services and responsibilities from each other. Working together or "partnering" can be beneficial from both sides. Use the following managing and motivating themes to build a collaborative relationship.

  • Work with the distributor on a regular basis. Avoid surprises, review sales figures and inventory data on a regular basis.

  • Develop a marketing plan every year with your distributor. Jointly work on periodic reviews and revisions of the marketing plan.

  • Schedule international sales meetings when necessary for new product launching or other special events.

  • Ask for new product ideas from your distributor. Modify your product accordingly to stay competitive within the market.

  • Try to work out differences. Changing distributors can be costly and lead to the end of product representation in that market.

  • Be flexible, blend your management style with your distributor's when necessary.

  • Be honest and sincere when interacting with your distributor.

Recognition and Sales Conferences

Recognition
Methods of motivating and encouraging your sales staff require special consideration for your overseas distributor. Rewards, incentives and recognition may take many forms, but consistent periodic recognition is essential for a positive overseas sales environment.

Depending on the nature of your foreign market, some methods of recognition might include:

  • Print based recognition in the form of a prestigious plaque or certificate, announcement in the company newsletter, or recognition in the annual report or company profile. Use first names and business titles in the recognition.

  • Trips could include travel awards, a visit to the company headquarters, or to trade shows, conferences and/or sales meetings.

  • Bonuses might include a cash award for personal recognition or an annual increased based on performance.

  • Entertainment, inclusion of family, and gifts of value might be an appropriate recognition in some countries. Keep a record of gifts presented in the past to avoid future duplication.

Notes on proper protocol will serve as the basis of your personal recognition program for your distributor. You must be very careful to set up rewards that are acceptable to the culture, customs and preferences of the foreign market your distributor represents. Sensitivity to the unique cultural attitudes towards a reward system will help build a sincere relationship of trust and friendship.

Sales Conferences
Sales conferences are an excellent source of motivation. They serve to inform, recognize sales efforts, and create new energy and enthusiasm. Your distributor will want to learn market updates, current product information, competitive sales programs, and new sales techniques. It also allows the distributor to meet with other sales staff or distributors of your product and exchange ideas and useful tips.

Pursuing International Bid Opportunities
One area that is frequently overlooked by U.S. businesses, except for our multinational giants, is the opportunity for bidding on international projects. As these become more prevalent and technology oriented, the aware manufacturer and service provider will find the arena quite profitable. The contacts and sources used here are also useful for finding trade leads, locating potential purchasers and partners, and obtaining market information. Therefore, they should not be overlooked by anyone seeking to enter the export market.

The primary organizations that are involved in the international bid forum are multilateral development banks (MDBs), the U.S. Agency for International Development, the United Nations, and a number of miscellaneous agencies and programs.

Multilateral Development Banks (MDB)s
A Multilateral Development Bank (MDB) is partially a development agency and partially a bank. It obtains its funding from contributions from a number of nations. The U.S. government is a substantial contributor to most of the active MDB's. The purpose of the MDB is to provide a funding source for Less Developed Countries (LDC) that otherwise may not have the ability to borrow for needed projects.

As a lender to the LDCs, a multilateral development bank can promote long-term and stable growth in those countries, coordinate sound financial decisions and provide oversight to the LDCs and the developments that are the basis of the MDB loans. Therefore, an MDB is both a contact and conduit for you to research and bid on those contracts and subcontracts. The five main MDBs are:

The MDB Project Cycle
Become involved in the MDB project cycle to establish your interest and explore opportunities. The following are the cycle phases which are similar for all MDBs and require approximately a two-year process where detailed plans are developed and also is a time when bid participants and contractors start their initial involvement including possible contracts for design and engineering work.

Appraisal - is the stage where the MDB staff fine tunes the projected loan documents are executed. At this point the MDB continues its oversight and encourages the competitiveness of international bidding by the prime contractors.

Evaluation - is the final stage for the MDB. It is a review of the project and has some impact on the direction of determining future projects.

Participation in MDB Financed Developments
To participate in a MDB project, keep track of the MDB publications, relevant private sector publications, and maintain contact with DOC facilities and liaisons. You can also locate bidding agencies in targeted markets since it is the local entity that provides bid details. Get involved as soon as possible, no later than the time the MDB loan is authorized.

Previously, typical MDB-financed projects were for large infrastructure development. This has now shifted to those more concerned with technology, health, communications, and the environment.

United States Agency for International Development (USAID)
The U.S. Agency for International Development (USAID) administers a range of economic assistance programs that combine support to foreign countries with definite needs and at the same time, promotes U. S. national interests. These include promoting open and democratic societies and the improvement of lifestyles and healthy standards.

Most USAID activities are centered around USAID missions which identify specific areas of need which is then reported to the Mission Director, then Ambassador, and eventually the Secretary of State. Firms interested in working with USAID should obtain The Guide for Doing Business With USAID from the government printing office. This gives a detailed description of their programs and procedures.

Opportunities exist for commodity sales, contracts for project consulting services, and a variety of products. As with MDB programs, USAID projects are either financed or under oversight by the agencies and the actual contracting is done by the foreign country or agency. Go to section Finding Trade Leads - United States Agency for International Development (USAID) on previous page for  information referenced earlier in this chapter.

Other Agencies and Programs

United States Trade and Development Agency (USTDA)
The Trade and Development Agency (USTDA) is is the only agency providing feasibility study grants for overseas projects. These grants are made to the foreign country with the condition that the contracts given out be with U. S. companies. Often the projects investigated for feasibility by this agency can turn out to be quite substantial, such as communication networks and airports. Go to section Finding Trade Leads - United States Trade and Development Agency (USTDA) on previous page for information referenced earlier in this chapter.

United Nations (UN)
The many subgroups and advisory groups within the United Nations are of themselves a large customer. Some of the more prominent are the United Nations International Children's fund (UNICEF), UN Educational, Scientific, and Cultural Organization (UNESCO), the World Health Organization (WHO), and many more. You should obtain the General Business Guide to the United Nations if you are interested in pursuing this avenue.

Defense Security Cooperation Agency (DSCA)
Additional opportunities are available for defense and military oriented exporters which are under the Defense Security Cooperation Agency (DSCA) if U.S. funds are utilized. This agency's procedure can be found in Department of Defense publications: Security Cooperation Management Manual (DOD 5105.65) and FMS Reinvention Goals for 2001 and Beyond.

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Questions & Answers

If you do not find the answers to your questions, please contact the Trade Information Center at (800) USA TRADE between 8:30 and 5:30pm, Eastern time.

"I have some questions about export licensing."
See Understanding the Rules of Trade in this Tutorial, or contact the Western Regional Office of the Bureau of Export Administration at (408) 748-7450.

"I have some questions about imports, tariffs, or duties."
Imports are handled by U.S. Customs. The San Francisco number for Customs (415) 705-4488 or you can call Washington DC at (202) 927-1000. Tariff schedules for APEC countries can be found on the home page of the APEC Tariff Database.

"I need to get a patent/trademark/copyright."
Extensive information on this topic is covered in Understanding the Rules of Trade in this Tutorial. Or, you can contact the Patent and Trademark Office for forms or more information. The U.S. Patent Search office offers downloads of full issued patents and patent applications for free at http://www.us-patent-search.com/cgi-bin/links/add.cgi

"Where can I get a copy of ...?"
If the document is published by the U.S. government, visit the U.S. Government Online Bookstore.

"I need to find out about regulations in [foreign country]."
Country-specific information can be found in the Market Research section of TradePort.

"I am planning to set up my own import/export business. What are the regulations and licensing requirements?"
The Federal Government does not require a company to have a license or permit to engage in the import/export business. Contact your appropriate state or local city hall regarding requirements and procedures for obtaining business permits.

"What products require an export license?"
Certain products, becuase of both their civilian and military purposes, may require an export license as such products can readily be applied to a foreign country's military program. U.S. companies exporting these products, such as super computers and high-technology devices, need to obtain an export license. See Understanding the Rules of Trade in this Tutorial or contact the Western Regional Office of the Bureau of Export Administration at (408) 748-7450.

"We are a small manufacturing company and would like to export our product overseas. What kind of assistance can you provide?"
A local export assistance provider in your area of California can provide you with a wide range of services. To find the provider nearest you, please see the TradePort Assistance Centers page.

"I would like to set my business in [foreign country]. What are their requirements?"
Country-specific information can be found in the Market Research section of TradePort.

"How can I obtain a carnet?"
Carnets are handled by the U.S. Council for International Business.

"I am an exporter in need of a financing assistance. Can you help me?"
Many different forms of financing assistance are discussed in-depth in the Obtaining Financing section of this Tutorial.

"Can I purchase a product to be exported overseas and have it exempt from California sales tax?"
The State of California Board of Equalization regulates all sales tax in California.

"I need to find some statistical information regarding cost of living or any reference regarding consumer price index."
Statistical information can be found by visiting the Market Research section of TradePort.

"Which governmental agency regulates the labeling of products, such as Made is U.S.A.?
The Federal Trade Commission (FTC) determines whether a product can be labeled, "Made in the U.S.A.", provided that it is comprised of 51% U.S. parts or components.

"I would like to register my product to get an R.N. Number?"
Contact the Federal Trade Commission.

"Where can I copyright my publication/book?"
Extensive information on protecting your intellectual property rights can be found in the Understanding the Rules of Trade section of this Tutorial, and in the TradePort Library.

"I would like to establish my own freight forwarding company. Can you help?"
Contact the U.S. Department of Transportation's Maritime Administration

Where would I obtain information on classifications of products and documentation/licensing requirements to export merchandise?
This Tutorial provides extensive information on product classification in the Market Research section.

What carrier offers service to a particular country and do they have the special cargo handling equipment I need?
Focusing on the Details in this Tutorial provides information about finding the right carrier.

What is the harbor maintenance fee? How is it used?
The U.S. Customs Service is authorized by the Water Resources Act of 1986 to assess a harbor maintenance fee on the value of commercial cargo loaded on or unloaded from a commercial vessel at ports covered by the Act. Proceeds of the harbor maintenance fee are made available to the U.S. Army Corps of Engineers for the improvement and maintenance of U.S. ports and harbors.

The fee is paid by the importers and exporters of cargoes. The fee is based on .125 percent of the value of the cargo.

What is cabotage?
Cabotage is the trade or transport of cargo in coastal waters between two points within a country. U.S. cabotage laws are referred to as the Jones Act. Cabotage laws are common to all countries with waterborne transportation systems.

Where can I obtain information on the Jones Act?
The actual interpretation and enforcement of the Jones Act is the responsibility of the U.S. Customs Service and U.S. Coast Guard. For general inquiries concerning coastwise laws contact the U.S. Department of Transportation's Maritime Administration.

What is an SGS Inspection? Are preshipment inspections required?
The SGS Government Programs Inc. is an independent service company with offices worldwide. It carries out the majority of preshipment inspections. Preshipment inspection is an international program verifying that the quantity, quality, and price of purchased goods meet the import requirements of specific countries. According to SGS, the purpose of these inspections is to monitor purchases arranged by importers in these countries.

Quality and quantity are verified by the packing list and pro forma invoice. Price is evaluated based on the prevailing market price at the time specified in the conditions of sale. Verification of quality, quantity, and price also involves physical inspection.

The cost of preshipment inspection is paid by the importing country, or by the importer. The seller is only obligated to present the goods for inspection. Disputes over the final determinations of the SGS can be appealed by writing to the Appeals Committee, SGS New York.

For information on the countries that require preshipment inspections, contact SGS

Who can complete a bill of lading?
U.S.-flag carriers can prepare bills of lading. They also have value added services such as cargo status tracking and electronic data interchange (EDI). Freight forwarders also prepare bills of lading. Focusing on the Details in this Tutorial provides information about freight carriers, forwarders and customs brokers.

What is Cargo Preference?
Cargo preference is the reservation, by law, for transportation on U.S.-flag vessels, of all or a portion of oceanborne cargo which is sponsored directly or indirectly by the Federal Government.

Where do I get information on cargo preference laws and issues?
Contact the U.S. Department of Transportation's Maritime Administration

Who can tell me if a commodity that I am shipping is a hazardous material and possibly subject to certain restrictions or regulations?
Contact the  U.S. Bureau of Industry and Security.

 
 
 
 
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