1. Where to start?
2. Go Online
3. Select And Evaluate Your
Market
4.
Understand that every market has different demands & changes every few
years
5. Analyse, "Position"
and Modify Your Products
6. If You
Fail To Plan, You Are Planning To Fail
7. Build A Network
8. Develop Export
Inquiries Handling Rules
9. Negotiating Is An Art
10. Be Aware Of Frauds
11. Be Market- And Customer
- Focused
12. Be Prepared To Meet
Growing Demand
13. Be Prepared To Spend
Time And Money
14. Make Decisions
On A Commercial Ground
15.
Don't Try Too Much At The Beginning And Don't Grow Too Fast
- Build A Corporate International Image
- Your credibility is a key to your global success. Even if you run
a small company, you should present yourself internationally as a
solid and reliable potential partner.
- Some little changes and touches will add considerably to your global
appearance.
- Adapt corporate stationery to your export activities - add international
dial-up code and word "Australia" to contact details.
- Develop company logo
- Always sign out-coming correspondence indicating you job title,
company name and contact details, for example:
- John Smith, Export Manager
- Australian Trading Company Pty. Ltd.
- 124 Deakin Avenue Mildura VIC 3502 Australia
- Phone: 61 3 502 6776
- Facsimile: 61 3 502 7667
- E-mail: export@export61.com.au
- Web: www.atc.com.au
- When talking to prospective buyers, don't say "I" - always say "We"
and so on.
- Talk To Others
- Investigate if there is any government programs or other assistance
available. Talk to regional Austrade and Victorian Business Centre
representatives.
- Most likely, there are companies in your region, which sell similar
(but not the same) products aboard. Do not hesitate to talk to them.
Successful people are usually willing to share their knowledge and
experience. Not only can they advise you on some important issues
but also may be able to introduce you to key service providers and
potential overseas buyers.
- Learn About Export/Import Regulations And Terms Of Trade
- Contact your industry association and relevant export authority
and investigate if there are special requirements for your products
to be exported. You may need a licence, export permit, veterinary
or fito-sanitary certificate or have to meet some other export requirements.
- Austrade and other export bodies will be able to advise you on import
requirements and regulations that the selected market may have.
- Contact the Consulate of the country you are going to export your
products to and talk to the Trade Commissioner.
- Spend some time to learn about terms of trade and delivery, methods
of international payments, International Trade ethics and so on. You
should be able to select the most favourable terms and clearly understand
the benefits of these terms.
- Hire experienced people or train your staff
- Everyone in your company must know that from now on you are a global
company. All export inquiries must be referred to appropriate personnel.
Do not allow your secretary or a production manager to run your exports
and act on your behalf or on behalf of your export manager.
- Exporting is complex. It is essential that your staff know the difference
between domestic and international sales and understand the rules
and ethics of International Trade and most importantly terms of trade.
Get a web site
Nowadays, having a corporate web site is a "must" in International
Trade. Nine out of ten of your potential buyers will try to learn about
your company and products through the Internet prior to approaching
you and if they can't find your web site, they may very well choose
to deal with your competitors.
Get an online product catalogue and indicate your general terms of trade
to the web site. Provide visitors with direct contact details. Introduce
a facility to receive export inquiries. Try to develop a web site, which
will not only represent your company and products but also will save
your time and money.
Take advantage of the Internet
There are numerous free online trade boards, import-export
directories, forums, etc. Spend some time and post online offers on
these sites. Not only it will increase your chances of being found by
potential buyers but also will add value to your web site's Search Engine
ranking.
Data->Information->Knowledge->Wisdom
Given the number of markets worldwide, which might be showing
high potential, the question arises as to how to select this market smartly.
Information is what you need to select an appropriate export market. And
again, using Austrade, chamber of commerce, your industry association,
relevant export authority and your colleagues might be of great assistance.
Although nobody will give you direct advice, you can get much better knowledge
of where to go global.
Statistical data analysis is essential when selecting the market. You
can obtain lots of useful details from the Australian Bureau of Statistics
or from commercial companies, which specialise in collecting international
trade data. Some companies will be also able to provide you with very
specific export/import data about products similar to yours and about
most popular markets.The Internet is a great source of information. Go
online and browse the Internet. You wont find the exact answer, but I'm
sure you'll get some good ideas.
A good indication of the export opportunity is the number of inquiries
from a particular market. If you receive significantly more inquiries
from Korea than from any other market it may be a good sign that there
is a significant demand for your products in Korea.Australia's geographical
location plays a certain role in exports. Asian markets are much more
attractive in terms of transportation costs and time. Asian customers
are familiar with Australian products and quite often it is easier to
negotiate better deals with Asian buyers.
Rapidly growing markets, such as China and India, are usually better
targets for commencing export than developed countries. And so on.
When selecting the market you should:
Know the market's requirements
Assess your target customers
Examine your competitors
Be prepared to compete against lower-cost, lower-price local companies
Talk to Austrade's local office
Austrade may assist you greatly in
evaluating and entering the market. Do not ignore this option. When
contacting Austrade's local office, do it in writing preferably by fax.
Introduce your company, indicate your interest and be specific in your
inquiry.
Catch a plane!
Go to a target market personally and get a feel for local conditions.
Do your homework before the trip:
Have a list of tasks you want to complete
Arrange a meeting with the Australian Trade Commissioner and several meetings
with prospective buyers
Visit a few stores selling products similar to yours
Review competitor's prices and analyse their pricing policy
Know current affairs and a little history and geography
Learn a little language
I have deliberately emphasised this issue as a separate topic. To disregard
it is one of the most common failures in International Trade. Your products
may be highly demanded in one market and be absolutely unsaleable in another.
The packaging you've introduced in US, most likely would be unattractive
for Indonesians. Without an understanding of market trends and demands,
its uniqueness, business traditions and people's mentality it is "mission
impossible" to successfully develop the market.
You also should understand that every market changes every few years.
Technology, globalisation, privatisation, lifting of the trade barriers
and softness in import/export regulations are the major factors, which
affect International Trade. And while you might think that these factors
are too global to bear in mind when considering your offshore activities,
they will influence the market radically and you should adjust your marketing
and export strategies according to the current situation.
Packaging optimisation for shipment
There are two major objectives in packaging optimisation in regard to
shipment:
To reduce shipping costs and
To ensure safety
sI used to export fruit juice to Moscow and had to allow up to 5% for
damaged stock for each shipment. Because of several loadings/unloadings
and temperature fluctuation, air penetrated the bottles and the juice
was becoming spoiled.
The problem disappeared when the manufacturer agreed to introduce a
special membrane sealing the tops of the bottles.
Packaging, Quality, Price
Australian goods are generally dearer than local produce. On
the other hand, the "green & clean" image of Australian products is a
great competitive advantage. You'll be surprised that in International
Trade the price is not really a decision making factor. If you sell FMCG,
commonly packaging is the first priority, followed by quality and then
price.
Be prepared to customise your products to meet customers' needs
Domestic success of your products doesn't ultimately mean global
success. The major competitive advantage of Australian juice in Russia
was the packaging - it was the only juice on the market packed in plastic
bottles. However, after several months of sales I discovered that my target
audience was very limited … due to the packaging. 90% of end-users simply
could not afford to buy a 2L bottle. It took me almost a year to convince
the manufacturer to launch 1L PET packaging, and after that my export
sales increased by 80% within six months.
Create unique marketing strategy
Professor Michael Porter of Harvard University said that a
company doesn't really have a strategy, if it performs the same activities
as its competitors, only a little better. To be successful you should
have a strategy, which has strong points of difference from your competitors'
strategies.
Develop a marketing plan for each market
Marketing plans don't have to be a 100+ pages document with
numerous tables and diagrams. Try to keep it brief and simple. At a
minimum, every marketing plan should contain:
Market analysis
Marketing objectives and goals
Marketing strategy Marketing action plan
Marketing controls
In other words, before entering a market you must clearly understand
what has happened, what's going on, what do you want to achieve, what
do you need to do to achieve it, how are you going to do that, and what
might happen.
It is essential to set up realistic market goals, distribute them to
everyone within the company and constantly control the progress towards
these goals.
Develop an export plan for each market
The common confusion within the business community is the view
that marketing and selling are the same. That is not quite right. While
selling is part of marketing, your export plan has different objectives
and focuses on different tasks.The export plan should include:
- Export readiness analysis
- Trade Regulations and Barriers Assessment
- Terms of trade and payments
- MarketResearch
- Export Strategy
- After-sale strategy
- Logistics and distribution
- Export sales forecast
- Product Development
- Pricing
- Financing
- Implementation plan
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Set up export prices for each market
There are no rules in setting up export prices and nobody can
tell you what is the "right" price. Furthermore, the price for the same
product may vary significantly in different markets and most likely you
would have several prices for the same product depending on the following
factors:
Marketing strategy
Product uniqueness, quality and brand recognition
Quantity
Market trends and demand
Target customers and so on.
How a product is priced is crucial in getting the buyer's attention,
before the buyer becomes familiar with the quality of the product, delivery
and service.
Your goal in establishing export price is to be able to sell maximum quantity
with maximum profit margin.SWOT analysis
It is a good idea to start your planning with a SWOT (Strengths, Weaknesses,
Opportunities and Threats) analysis. Having a list of SW and a list of
OT would help you to understand which matters require attention.Develop
a problem solving plan
Delays, damages, quality complaints, stealing, non-payments sometimes
happen in International Trade. A detailed problem-solving plan is a vital
part of business planning.
Exporting is Teamwork
You are not able to conduct an international transaction on your own.
There are always several participants who play an important role in your
export operations. You'll be surprised, but usually you can find all you
need in your region.
Write down a list of services you need to be provided for your global
activities. This list as a matter of fact should be very close to your
supply chain plan.Do you need to open a bank account in US dollars or
are you going to receive payments under letters of credit? Then go and
introduce your company and yourself to a local international banker.
Extra Tip.
It is not necessary to do international banking through the bank you are
dealing with domestically. Select the bank with the greater international
presence and with the wider network of corresponding foreign banks. The
best-case scenario is when your bank has a corresponding bank in the country
of your interest. Do your products require to be certified? Talk to the
industry association; export authority or certification company representative
and build a personal relationship.
Need insurance cover?
Major insurance companies deal through agents. Try to find an insurance
broker, who deals with a reliable marine insurance underwriter, in your
hometown and build a personal relationship.
A responsible freight forwarder is a key player in your exports. Pay
extra attention to selecting a shipper for your goods and again build
a personal relationship.
Never stop building your network. The more reliable business partners
you get, the less troubles you will have.
Do not concentrate on management only, but also on key personnel
A small present to a secretary or to the employee, who is in charge
of your bills of lading, may pay you back greatly and unexpectedly in
the future.
When You Export - Market From Strength
Respond in 48 hours
You'll be surprised by your potential buyers expectations in
regards to receiving replies to their inquiries. Especially when you
are dealing with Asian or Middle Eastern customers. They send you an
e-mail and then call you in a couple of hours later demanding a reply.
We have recently received an inquiry from Kuwait. The initial e-mail
came through on Sunday. On Monday morning I had a reminder, in the afternoon
- a warning demanding an immediate respond and on Tuesday morning -
a phone call from Kuwait. And if you think that that was an urgent matter,
it wasn't. An advertising company acting on behalf of its client wanted
to discuss the possibility to promote their business at Export61.
Learn to recognise "genuine" inquiries and beware of the "dream" orders
As a rule, a "genuine" inquiry has a brief introduction, is fairly
specific and must have company name, contact name and contact details.
If you clearly understand that an inquiry you received isn't worth an
answer, just ignore it. For example, if you sell oranges and somebody
ask you to provide an export quotation for bearings or if a foreign company
is looking for a wide range of Australian food products without any further
details, most likely these inquiries will take you nowhere.
There are quite a few companies and individuals out there, who are
just playing in International Trade. So if you received an inquiry for
the supply of 50,000 tons of table grapes, you can simply throw it out
and never reply.
Check Your Counterpart
Before any serious negotiations you should try to check your
potential buyer. Go online and try to find some information on the Internet,
again - contact Austrade's local office, ask for banking details and contact
the foreign bank, ask for referrals and so on.
Make allowances
Your buyers will be pleased if they manage to negotiate considerable
discounts. Don't disappoint them. Include at least 10% in your export
price list for negotiations. By discounting the price you'll be able
to gain better terms. However, you have to be careful with allowances.
If the price is too high you may never get a buyer at all.
Learn about cultural differences
You may offend your potential buyers if you fail to learn about
cultural differences especially in the Middle East and Asia.
For example, you wouldn't ask about your host's wife if you have been
invited to visit your counterpart's home in the Middle East.
In Asia, if you are invited to a business lunch you should be prepared
for a 1-2 hours conversation, which has nothing to do with your prospective
deal. You'll be asked about your family, childhood, hobbies, favourite
food, etc. and you should react accordingly. Asian people want to know
whom they are dealing with before any business discussion.
All oral agreements must be confirmed in writing
This has to be one of the "golden rules" of your operations.
You must have a written confirmation of agreed terms on hand before
you act. A promise "to send you a written confirmation tomorrow" is
not good enough.
Exclusivity is possible but not before you know your buyer
Lots of potential buyers will ask you for the exclusive rights
to represent your products or company in a particular market before
they start trading with you. Don't decline this possibility, declare
that you are open for a discussion but also get to know each other,
establish a relationship, test the market and so on.
When you agree to provide exclusive rights
to a foreign company, you should consider which conditions are to be
included in the exclusivity agreement.
First of all, do not sign such agreements for longer than a year. If you
are happy with your sales, you can always prolong it.
You should require that a certain quantity of your goods would be sold
in a certain period of time, say 4 to 6 months, with the possibility
to terminate the agreement if the buyer is not able to meet this condition.
The value of the first order is another issue to consider when negotiating
exclusivity. 20% of the agreed yearly quantity prepaid is considered to
be a fair deal.
If you need a translator - get a good one
Sometimes buyers may require signing a bi-lingual contract.
In this case, the accuracy of business translation is crucial. Varied
use of terminology in different countries can have an entirely different
meaning and cause costly disputes.
10. Be Aware Of Frauds
Some people in International Trade are making a living out of frauds.
The most known schemes are non-payments, samples and complaints.
You may very well secure the payment for your products if you do your
homework and select the right terms of payments, but it's much harder
to protect your business from the other two.
A good indication that something is not quite right is a request for samples
in the very first inquiry. The quantity of samples is another issue to
consider. If somebody asks you to send 2 cartons of wine as a sample,
it just doesn't sound right, does it? False complaints are common and
very hard to recognise as scams. The best way to protect your company
against these problems is to include a very detailed "complaint clause"
in the contract.
After You Export - Add Value
11. Be Market-
And Customer- Focused
Build a strong business relationship
This is a cliché. Everyone says that, because you cannot avoid it in your
business operations. I just want to add a suggestion of not ignoring small
issues in building business relationships. Believe me that if you send
a postcard or even an e-mail on major national holydays and on key personnel
birthdays, that adds considerably to the relationship.Win buyers through
better service
Remember that the key attributes of every service are
Speed
Cordiality
Knowledge and
Problem solving Win buyers through exceeding expectations
Philip Kotler, the author
of several well known marketing books said: "Meeting customer expectations
will only satisfy customers; exceeding their expectation will delight
them".
However, there is a pitfall that the better you act, the higher expectations
your customer has and one day you find that the task of exceeding the
expectation is too difficult and too costly. You should decide where to
draw the line between exceeding the expectation and making profit.
12. Be
Prepared To Meet Growing Demand
If you take into account all the above issues than most likely your products
will be successful internationally and the demand for them will be increasing.
If you can't meet the demand you risk losing the whole market. People
are not interested in dealing with you if there is no future growth. Be
ready to increase production or to outsource similar products elsewhere.Always.
13.
Be Prepared To Spend Time And Money
Generally, investments in international markets are greater than domestic
investments. Furthermore, exploring foreign markets can take longer
and cost more than expected.
14. Make Decisions On A Commercial Ground
Making decisions on a commercial ground does not necessarily mean that
your profit has to be the only element to consider. However, you should
clearly understand what benefits you get by reducing your profit margin
or spending all profit on offshore marketing.
15.
Don't Try Too Much At The Beginning And Don't Grow Too Fast
Concentrate on one market at a time, moving on to the next only after
succeeding in the last. Wait until cash flow is good enough to justify
your expansion.
Legal Notice
This tutorial has been developed for information purposes only and shall
not be construed, implicitly or explicitly, as containing any commercial
or financial solutions to risks associated with international payments.
Under no circumstances shall the author, Newsta Pty. Ltd. or its directors,
employees, shareholders or affiliates be liable for any direct, indirect,
incidental, special or consequential damages.
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