DEVELOPING A SUCCESSFUL EXPORT STRATEGY
In 2010, the volume of international trade (exports of goods and services) exceeded $18.9 trillion. A quarter of everything grown or made in the world is now exported. Export of merchandise accounts for the bulk of international trade ($15.2 trillion). Export of commercial services ($3.7 trillion) has been growing faster than trade in merchandise. Given the rapid expansion of international trade, there is a viable opportunity to increase sales via exports.
Salient areas to consider in export trade
- Select the right product: It is important to assess the export potential of your product, the needs it will satisfy in the foreign market as well as any design modifications that may be required to make it suitable for the given market.
- Identify the markets: A comprehensive market research will help you understand the economic, social, cultural and other factors (including import rules) that could have a direct impact on your export success. It is also advisable to consider trading partners of the firm’s home country because the business climate may be quite favorable since the trading partner (s) is a sizeable purchaser of goods from the exporting country.
- Examine and analyze import regulations: Exports are subject to a variety of restrictions in importing countries. It is important to identify if there are restrictions such as tariffs, quotas etc. or licensing /documentation requirements and their implications for your exports.
- Examine and assess export regulations: Identify any export regulations that may have an impact on your exports. This includes but limited to export licensing rules to anti-boycott regulations.
- Payment and financing issues: Payment terms are critical in obtaining an order. Exporters must learn to provide appropriate payment and financing terms that would enable them to expand their markets. They must be familiar with the various sources of public and private sources of export financing.
- Familiarity with terms of sale: Terms of sale differ for domestic and foreign transactions. INCOTERMS describe the responsibility of the buyer and seller in international trade transactions. They were created by the International Chamber of Commerce and have recently been revised.
- Familiarity with documentation requirements: International trade runs on documents! There are a variety of documents that are critical in getting your exports shipped as well as successfully imported in foreign markets. This can be facilitated by hiring freight forwarders who specialize in advising the exporter on the most economical choice of transportation. The forwarder also ensures that the goods are properly packed and labeled and that documentation requirements are met so that the cargo is cleared at the port of destination.
- Provide for adequate insurance: Given the risks in transportation, exporters must ensure that there is adequate insurance for the cargo and determine the party responsible for such payment.
- Familiarity with sources of export information, counseling and support: The US government’s trade portal, established by the US Department of Commerce has a website which provides a wide range of resources for new and established exporters. Export.gov also provides announcements of trade missions and training programs that are open to small business.
- Methods available for entering foreign markets: A firm must decide the best options for entering a foreign market. It can choose between direct and indirect exporting.
The 7 steps to an export sale (adapted from Australian trade website: