Kemal Sucu, an International Business strategist and Ashton International Business Management Diploma program graduate, shares his insights on exporting. Is exporting really that difficult?
Since I started working, I have seen many business professionals and entrepreneurs who believe that exporting is a complex and risky way of doing business. Like a broken record, they repeatedly ask the same questions: Why does exporting have to be so hard? How do I minimize the risks? How do I prepare my offer? What are the common legal issues I need to consider? Which market should I look at? Should I use an agent or a distributor? And so on.
Looking at those questions, exporting really doesn’t sound promising. You may also say that if it were easy, everybody would do it – but it might not be as bad as you think. Keep reading, and you will come to recognize that you were focusing on the wrong things.
Unlike the general perception, exporting is not as complex and risky as people imagine it to be, and it can be immensely rewarding. Exporting does require a systematic way of doing business and it has its own rules. When exporting, you go through unique learning experiences and learn how to improve decision-making and operation management.
If you know the basics of international trade, it is almost inevitable that you will be successful in an international arena.
Of course, you may not be successful by only following the exporting rules and strategies, but understanding the basics is key. Some of the things you need to know are:
- Payment terms (letter of credit, cash against goods, etc.);
- Incoterms (define how to deliver your product or service);
- Market Entry Methods (direct or indirect exporting), among others.
Understanding the basics helps you answer the questions that I’ve stated beginning of my article, and you can be sure that these are not the factors that make exporting complex or challenging. These are just the rules that you need to understand to be able to properly manage business internationally.
If those were not the factors that could make your export journey difficult, then what are the real factors to consider?
1. Customs and Country Regulations
International trade requires working with many different customs authorities and dealing with different import requirements in different countries. In this matter, your first duty is to check customs regulations that your target market requires. It is vital to meet the all the requirements to export or import your product or service without any problems.
Hints for exporters & importers:
- Work closely with your Customs Broker for the product or service you want to import or export. Your customs broker can provide you with all the information necessary for clearing the goods from customs, including customs duty, VAT, and other duties. Thereby, you can have a good idea of the landed cost for the product you want to import, and the export cost for the product you want to sell in foreign markets. This also helps you negotiate the price with your suppliers or customers in foreign countries in order to reach your target landed cost or determine the most competitive sales price.
- Keep in touch with the Governmental Authorities for specific inquiries about your product or service. These authorities can help you with the documentation requirements on your goods and/or services. For instance, food, drugs and feed are just a few things that require additional paper works and permits. Thereby, you can inform your supplier or customers in advance in order to issue the documents in a proper way.
2. Cultural Differences
I always wanted to live in the USA and enjoy the American Dream. I am sure that you regularly hear about the American Dream, or at least the so-called “rags to riches” stories. They reflect a cultural belief that anyone has the potential to become very successful if he or she works very hard in the United States. This represents a cultural aspect of the US society and can give clues about the way of doing business and the personality of citizens in the USA.
Culture includes the beliefs and norms that guide the life in a society. It tells people which behaviours are considered appropriate and which behaviours are not acceptable in a given society. In a globalized, multicultural modern society, understanding the national and business culture is gaining importance and is becoming critical to people’s success in international business.
Businesses that want to profit from exporting should learn about the history, culture, and customs of the countries with which they wish to work. Some of the cultural differences I have faced in my work were mainly the differences in business style, attitudes toward business relationships and punctuality, negotiating styles, gift giving, and greetings. It would be challenging for me to explain each nation’s culture here one by one, so I would recommend doing your own due diligence.
Suggestions that I can give you are as follows:
- You can learn the highlights about some cultures by reading travel guides and local yellow pages: they can give many insights into how other countries do business.
- You can get help from your freight forwarder. Freight forwarders are great sources to learn about the target market because they have local offices in almost every country. Contacting them and asking them for information about the local culture is the easiest way of learning more about a foreign culture.
3. Competing in the Global Marketplace
Despite the local focus of some businesses, exporting is still very promising, especially for the businesses that follow the key “drivers” that shape the globalization of the world economy. It is important to know these drivers, as they often force businesses to consider their operations to survive. As a manager, you should be aware of the following drivers:
- Free Trade Agreements – Lowering Trade Barriers
- Foreign Direct Investment – Locate and Sell Anywhere
- Information Technology and the Internet
- Global Standards
- Global Products, Services and Customers
- Rise of Low-Cost Countries (such as China, India etc.)
Stay tuned for my next article to get detailed information on the drivers mentioned above.
4. Commitment, Hard Work and Dedication
Yes, I still believe that exporting is easy. But even though it’s easy, it requires hard work, long term commitment and dedication. If you want to make it big, you have to push yourself beyond your limits. I always this: International trade is different from domestic sales. It has different dynamics and a different mentality. You have to research the market, customers, distribution channels and competitors, as well as follow up on many different things in different countries. As you can see, it requires hard work.
Furthermore, you cannot expect to get the sales in a short period of time, as you could with the domestic sales. Exporting may need product modification, marketing and penetration strategy, financing strategy, and partner or distributor selection for the target market. For those reasons, it requires long-term commitment and dedication.
Let’s finish today’s feature with a famous quote:
“Never give up. Today is hard, tomorrow will be worse, but the day after tomorrow will be sunshine” – Jack Ma.
Written by Kemal Sucu
A pragmatic, smart, and strategic International business strategist and new market researcher, Kemal has good insights into international trade and is full of great marketing ideas. Kemal possesses the real life experience, academic capability and the necessary personal skills to help SMEs build up import-export strategies, enter new markets and expand their business activities in more foreign markets.