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Here are some things to consider before starting to export:
To choose a country, you will have to consider such things as:
What is the business environment like in that country? How stable is the government? Are there any economic or currency fluctuations, disputes with other countries, embargoes? How good is the infrastructure such as ports, airports, railways or roads, and warehousing? How acceptable are foreign goods or services? Are business opportunities directly available to non-residents, or will they only deal through arrangements such as joint ventures, foreign investments, agents or distributors.
Many countries have import controls or require special permits, inspections, health certificates, and use high tariff rates to regulate trade. As well, the Canadian government may require that you obtain an export permit.
Do you have a good understanding of the language and culture of doing business in that country? When dealing with international business, you may not be doing business the "Canadian way", and it may take many years to develop a rapport that will grow into business opportunities.
Export Source is Team Canada Inc's on-line resource for Canadian businesses seeking export information.
To know the market, you have to:
Look at the demographics of your market: family structure, age variances, education level, employment levels, income levels, spending priorities, decision making and authority, and any other information you can obtain to get a better profile of your potential clients. If your clients are other businesses, what characteristics do they have: sector, size, years in business, level of purchasing decision, branches, franchises, chains, etc.
How does the population feel about foreign goods and services from abroad? Certain countries openly welcome foreign products, while others shun or create non-tariff barriers to keep foreign products and services out.
Who are your target clients? Are they the end user or a retailer, distributor, wholesaler, manufacturer, etc.
To know your product/service offering (marketing mix), you have to:
Research what features and benefits your product or service offers that make a given marketplace a target. What modifications to the product/services may be needed to make them more saleable? Does your product require any re-packaging and/or re-labelling, translations, etc. Is after-sales service/maintenance required and how will it be done?
Consider how to penetrate this market. Whether you use an agent, distributor, or establish a joint-venture agreement. You must establish a clear marketing strategy to penetrate the market. Will that strategy be based on pricing, features and benefits, and/or promotional activities? What media is available and are traditional promotional methods acceptable in the new market? Who are the competitors and what are their marketing strengths and strategies?
The InfoExport site will provide information and services to help you measure your export potential, prepare for a new foreign market, and develop and implement a market entry strategy.
To keep within the laws, you have to:
Consider what is vital in an international agreement. What language will govern the contract; what legal jurisdictions and where will the contract will be performed (just because you are Canadian, the contract may not be drawn on Canadian law and the transaction may not be on Canadian territory); where is it enforceable, and is arbitration a consideration? Will the courts be neutral to foreigners or do the laws favour locals?
Consider safeguards (Force Majeure clause) to protect you against problems that are out of everyone's control and cannot be avoided, such as Acts of God (like typhoons, tropical storms), political issues, riots, strikes, wars which impose unexpected trade barriers and delays in shipment. When are the services of an international trade attorney required and how do I find a good one?
To get the product or service over there, you have to:
Consider everything from order taking to delivery to the final destination. Factors to examine are foreign order taking processes, billing processes, production schedules, delivery schedules, warehousing, inventory, packaging and labeling, shipping procedures, routes for shipping, modes of shipping, arranging for customs inspections, duties and taxes, arranging for insurance, arranging for transfer of title of goods, and of course, accurate documentation to facilitate collection of payment.
Consider the benefits of a customs broker to do your paperwork and to ensure Customs clearance in a foreign country. Consider the benefits of a Freight Forwarder, who will plan your routes, quote you a price for transportation and services, notify the ports of your arrival date, arrange for insurance, loading, unloading, containerizing, strapping, packing, etc.
To get it all done and paid, you have to:
Consider what financial resources you have available to ensure that current business activities can be comfortably supported prior to starting to export. New financial risks involve exchange rate fluctuations and issues such as currency repatriation, convertibility, etc. Currency of transaction is a major factor to consider. Many countries do not deal in Canadian dollars or many have difficulty raising American dollars. You must know ahead of time whether you can repatriate (remove) the dollars and what kinds of exchange rates you can get from the bank. What is the credit rating of the country and of the specific buyer?
Can you negotiate a "cash in advance" agreement with a buyer? This eliminates almost all payment risks for you as the exporter! Documents on Acceptance and on Documents on Collection (DOA or DOC), letters of credit (L/C), and other vehicles of documentary collection are all handled by international banking institutions. Your bank's international division, and your credit insurance agent can inform you of acceptable terms so that all of the paperwork and terms are complete and flow smoothly, to facilitate payment
Consider credit insurance safeguards in the event of a non-performance from pre-defined circumstances. Contact Export Development Corporation (EDC) for insurance against events outside of the buyer's and sellers' control.
In business, risk management is the key to continued success. International business simply has more risks to be managed. The key ones are country risks, currency risks, market risks, legal, logistics and commercial risks. Some of the elements within each of these have been described above. You will require the experiences of many people involved with trade to help you along the way.
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