Export Broker: Adventures in the Trade " The Sales Department"

Brokering deals, what I specialize in my business, can sometimes be dull as well as exciting.  Regardless of the day to day events I always learn something new. A couple of weeks ago I had a Central American client who was interested in a product, the client had specifically stated that she wanted the product to be manufactured in the United States. Now, I am an advocate for U.S. companies exporting their products but I honestly had nothing to do with this request, for whatever the reason this client wanted her products to bear the "Made in the U.S.A" stamp.  I go about doing my normal research,  after a couple of days I narrowed it down to a couple of companies that had the product.  After narrowing the list I started to make phone calls. This is where I made my mistake, and I relate it to you so you avoid it. Once I started calling I usually contacted the Sales Departments... wrong answer. These Sales departments are ruthless, and obscuring the truth seems not to be an issue. However many of them, specially with other small companies, are just way out of their league when it comes to exporting.  They usually don't have the knowledge or the decision making authority to obligate the company to an export deal. I wasted about a week doing this with little feedback, almost no information to give my client and as far away from the deal as I started.  I changed tactics and started researching  the leadership of these small companies, you will be surprised how much info you can find online.  I started contacting V.Ps and Owners and the answers and I got were way more helpful.  Some of the manufacturers that I contacted, companies known for their U.S. products, were even made in the U.S. at all.  I received an answer stating that " our products are Chinese made but we distribute in the U.S" now talk about useful information! I am still working on the deal, but now we are finalizing details of a trade rather than on the initial market research stage. Here are some tips for your own search:

1. If contacting a large supplier, contact the sales department first. However, double check absolutely everything that the department tells you. Ask about their exporting history and for point of contact  information of officers if the company exporting history is flimsy.

2. If contacting a small business or supplier, contact the officers directly.  Ask about the exporting history and on what terms they would be willing to conduct an export if no previous history.

3. Double check the answers you receive! There is nothing worse than presenting false information to your client. 

4. Be prepared to answer numerous questions, make sure you understand the requirements of your client, the regulations that will govern the trade, the terms of your client,  request of samples if necessary, etc. You are the expert for both your client and the supplier.

5. Stay positive, sometimes the deals fall through, The details might not be favorable or the client loses interests, there are a million reasons for the deal to go bad. Don't dwell on it, learn from the experience and move on to your next deal.

As always, look forward to your comments.

U.S-Korea Trade Agreement. Whats in it for you?

Last fall news of Free Trade Agreements appeared in the media for a brief period. The U.S. had finally signed three different FTAs; one being with South Korea. The news quickly faded more "pressing" matters like politics or the newest movie in Hollywood. But if you are a business owner, what does these news mean for you?

This morning I was reading my daily newsletters when I came across a brief article from the International trade Administration on the U.S. - Korea Free Trade Agreement. If you are a business planning on dealing these following points might be of interest to you:

1. The agreement comes into effect on March 15, 2012 (yes, in about a week!)
2.Almost 80% of exports from the U.S to Korea can be imported duty free, this is good news for both companies doing business there and those planning to do business there. You can use the FTA tariff tool, http://export.gov/FTA/ftatarifftool/index.asp , to see if your product qualifies.
3. Nearly 2/3 of all U.S. Agricultural exports to South Korea become duty free starting on March 15.
4. Commitments concerning intellectual property rights and the opening of Korea's enormous service market will also come into effect on March 15, 2012.

As most government regulations, if you do not claim the benefits of this agreement on your import/export activities you will simply not get them, you must explicitly claim them in order to take advantage.

FTAs are a great incentive for exporting, knowing the details and how they can benefit your operations is key. If you want to read more about this particular FTA go to http://blog.trade.gov/2012/03/06/how-u-s-companies-can-start-taking-advantage-of-the-u-s-korea-trade-agreement/

Look forward to your comments

The competitiveness and innovative capacity of the US. Any good info in there?

The U.S. Department of Commerce was tasked, in consultation with the National Economic Council, by the President of the United States to create a report about the current state of innovation in the U.S. " The competitiveness and innovative capacity of the U.S." is the result. Although a standard government report, by this i mean dry and not too exciting, it consists of about 160 pages, many of which are graphs and cover pages so your reading might be close to a hundred. The weather in the Washington D.C. area is not that great today, so i sat down this morning and read it.

Most of the report is standard, a document used by the administration to support its policies. It identifies three area or "pillars" in which government investments are essential; federal support of basic research, education and infrastructure. The report focuses on how the federal government needs to invest in basic research as private companies are not inclined to do so, how STEM education investments are essential and how improving infrastructure will benefit commerce. The benefits of these investments are rarely debated, the debate occurs when deciding who has to pay for them. This post will focus on two area that were presented, but not discussed in depth, in the report; Regional Innovation Centers and Trade agreements.

Regional Innovation Centers (RICs) are geographic areas around the U.S. in which particular industries are clustered. Some examples include the Institute for Advanced Learning and Research in the Dan River Region of Virginia focusing on research and STEM education and the Joint venture Silicon Valley Network, focusing on IT.   RIC are important because its a mutually supportive environment, companies in the area depend on each other for growth and the success of one can mean future growth for other companies in the area. The link for small businesses to RICs can occur in the SBDCs. Most land grant public universities have some sort of relationship with a RIC, and most of the innovations created at the university are funneled directly into the RIC for commercialization. Having a good relationship with your SBDC could help you understand two things; if your area is a RIC and what are the terms of entry into the regional community. Small start ups and small businesses struggle with R&D since it is expensive, tapping into a whole network who help its members with these costs might enhance your business.

The second area that i noticed were the trade agreements. The report, in its entirety, only devotes about 1.5 pages to trade agreements. it mentions the signing of the Colombia, South Korea and Panama agreements and the ongoing negotiations for the Trans-Pacific  Partnership (negotiations currently include Australia, Chile, Peru, Singapore, Brunei Darussalam, Malaysia, New Zealand and Vietnam) This is not enough. Mentioning trade agreements that have already been signed and the negotiations for another is not enough to help our small businesses export their products. Program from the U.S Commercial Services should be discussed, as well as the SBA and the Export-Import Bank. Signing FTAs with other countries is just one of the answers, more avenues for our business to learn and follow trade leads are necessary.

The whole report can be found here 

http://www.commerce.gov/sites/default/files/documents/2012/january/competes_010511_0.pdf 

What do you think? Can RICs help your business grow? Is assisting companies in their export endeavors really a priority or not? 

I look forward to reading your comments.

Exporting: Organizing your research and ideas

So you have a product that you wish to export. But what do you do now? There are several key things that you need to do to organize your research. In this series of blog posts I will explain a method, there are plenty of ways to doing this, for conducting your research.  The initial stages are very simple and you should focus on two research areas.  How is the product exported from your nation? Where can I export it to?

Can I export my product?

One of the first things you should figure out is if there are any restrictions on exporting your product. The Bureau of Industrial Security might be an initial stop for your research. The Department of Homeland Security and the Department of Commerce can further help you determine if your product can be exported or if there are restrictions on it. Most of the restrictions arise from dual-use items (those that have both civilian and military uses) but restrictions vary.  It is important to do this, you don't want to have your shipment of exports stopped at the port because of export restrictions, you will lose money and will probably not be able to complete your export transaction. The second step  would be to look for any assistance that the government might be providing for exports of your particular product. The Small Business Administration, U.S. Commercial Services and many other government agencies have programs specifically tailored to certain products, if yours falls under this it might make your exporting endeavors a lot easier. This forms the basis of your research, determine what you need to do to get your product through the port and out of the country and determine if the government is willing to help you do this.

Where are my exports headed?

Shipping requires a destination, your products must reach a buyer who is willing to pay a favorable price in order for you to make a profit. The first step is determining the places that you can't export to. The Department of State can be of assistance in determining places where U.S. companies cannot export. Finding a buyer is a little bit trickier. Visiting places such as your local SBDC, trade.gov, U.S Commercial Services Offices, local Chamber of Commerce, foreign trade promotion agencies, etc. are just various ways of finding that essential buyer. The key here is to diversify and use any assistance available.  This requires extensive research and is by far the most difficult part of an export endeavor.  How can I trust the buyer? Will he pay? Do I need to visit the buyer in person before making the deal? Is it a scam? These are just a few of the questions that immediately arise, and these are the questions that your research must answer.  There is always a risk in exporting, as in many business deals, the intent of doing research is not to eliminate risk but to lower its probability by being prepared. Do you want to make sure your buyer pays? Then determine a payment method that will ensure that he pays either up front or when the goods at are the importing port. There are plenty out there, you just need to find one that suits you.

The next entrance in this blog will explain the first step, how to determine if your product can be exported from the U.S

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Please share your comments and opinions,

Thanks for reading