Global Expansion and Exporting

Consider if your company has the supply chain, labor, and space to accommodate for increased production. Exporting may require a new line of production to match the regulations of the destination country. Consider the costs associated.

Does your staff have international experience? Determine if their experience fits your target market. If not, consider how to leverage the existing experience and compliment it with a new hire with that desired resume. Hiring the right people with international experience will be imperative – from translation to cultural knowledge and project management.

Using good data on your customers, where they come from, how much they are buying, and where the internet traffic is coming from, is an intelligent way to determine where you should focus on exporting. Analytics and Customer Relationship Management (CRM) software are helpful to pinpoint this information.

Consider what product modifications are required by target market regulations. There will be costs related to retooling, packaging, and labeling, etc.

There are plenty of resources for market resources, both free and paid. Your company’s first step should be to visit the resources on trade.gov to preview political and economic conditions, investment climate, regulations and standards, etc.

Secondary vs Primary research – Your company may use open source information and commission a market research report by a consulting firm in this regard.

Use Good Data

Utilizing analytics and other software will help inform the top locations to consider for exporting. Analyze your website traffic, where your current customers are, and where potential future customers are visiting from.

You may also consider visiting targeted countries to evaluate the potential for partnerships or determine product viability in the market.

The U.S. Department of Commerce’s Commercial Service offers their Initial Market Check service to American businesses beginning to export. This low-cost program helps companies develop contacts and assess export viability.

Initial Market Check: https://www.export.gov/Initial-Market-Check

Your company should understand where your current skill set falls in relation to the target market.

How can you market your product to best fit destination market desires?

• Don’t confuse your marketing strategy with its tools – advertising, sales, promotion.
• What are the characteristics, norms, and cultural nuances of your target market?
  • Observe how competitors approach the market.
• Determine the best promotional strategy
• Decide on a path to adapt your marketing strategy to the new target market

There are dozens of international trade shows or conferences to visit and show your product. The U.S. Department of Commerce traditionally has a presence, or a USA products pavilion, at many of the larger trade shows. Your company could participate in these pavilions for a nominal fee and introduce your product to the international market.

Contact your local US Department of Commerce representative and the Nebraska Department of Economic Development to explore this option.

Understand your USPs (unique selling points)

• Articulate your product and the problem it solves.
• What are the unique characteristics of the product, or process, that you hope to market in the international arena?

Define the Four P’s of global marketing for your business

• Product, Price, Placement, and Promotion
• Ask yourself: what is your product or service and how should it be adjusted to fit the market? What pricing strategy will you use?

Logistics covers the process of moving your product from production origin to its final destination in your export market. Consider the following important pieces of this process:

Freight forwarders and brokers

Freight forwarders can significantly decrease the workload on exporters. These companies negotiate rates with shipping lines, airlines, trucking companies, customers brokers, and insurance firms. It is up to you how much of the process you want them to control.

Foreign Trade Zones

From U.S. Customs and Border Protection: “Foreign-Trade Zones (FTZ) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States’ version of what are known internationally as free-trade zones…Foreign and domestic merchandise may be moved into zones for operations, not otherwise prohibited by law, including storage, exhibition, assembly, manufacturing, and processing. All zone activity is subject to public interest review. Foreign-trade zone sites are subject to the laws and regulations of the United States as well as those of the states and communities in which they are located.”

• Foreign Trade Zone 19 is located in Omaha, Nebraska. It is administered by the Greater Omaha Chamber of Commerce.

Grantee: Greater Omaha Chamber of Commerce
808 Conagra Drive Suite 400, Omaha, NE 68102
Andrew Schilling (402) 978-7940
aschilling@omahachamber.org

• Foreign Trade Zone 59 is located in Lincoln, Nebraska. It is administered by the Lincoln Chamber of Commerce.

Grantee: Lincoln Chamber of Commerce
Lincoln Foreign-Trade Zone, Inc.
1135 M Street, Suite 200, Lincoln, NE 68501

Method of transportation

• Ocean – Typical ocean delivery times are approximately 4 weeks. Ocean freight is useful for larger products.
• Airfreight – Faster and useful for smaller products.
• Land – Transportation via rail or truck is also an option if your export market is reachable by those means.

Local Sales Partner

Distribution partnerships allow your company to export to a destination without investing brownfield or greenfield. Your distribution partner will receive the product and distribute it to local retailers. Distributors provide ready infrastructure in the target market.

Sales Representative/Commission sales

Hiring a sales representative in the target market is an additional step towards establishing a presence in the target market. This involves either sending one of your own employees to sell and represent the company in the target market or hiring a local with an understanding of the product or service.

Joint Venture/Partnership

Joint Ventures occur when two companies enter an agreement to work together in a specific market on specific products or services while still maintaining their distinct identities. In some cases, this may require sharing intellectual property and know-how.

Greenfield Investment

Greenfield investment is the creation of a new facility through investment in the market. This step is usually taken after the company is viable and selling in the market for a period of time.

Brownfield Investment

Brownfield investment involves purchasing an existing facility in the market. This step is usually taken after the company is viable and selling in the market while looking to quickly expand production capacity to meet market demands.

Acquisition

Your company may consider acquiring a company in the target market. The acquisition will take time as employees begin to adapt to your company culture.

You have identified your unique selling points (USPs), developed your marketing strategy, and determined your path to market. Now is the time to put that marketing strategy to work and promote your product. What are the events and offers that you will run for your specific export product in the target market?

• The U.S. Department of Commerce’s Commercial Service offers their Gold Key Service to American businesses beginning to export.
  • https://www.trade.gov/gold-key-service
• Promotion can also be done with experienced domestic, multinational, or local level agencies. Be sure to consider the pros and cons of hiring outside agencies for your market entry.

As an exporter, your company is required to follow certain rules to be in compliance. Use the resources below to inform compliance measures.

Export compliance

• Visit the Bureau of Industry and Security within the U.S. Department of Commerce. The Export  Administration  Regulations are of particular relevance.
  • https://www.bis.doc.gov/
  • https://www.bis.doc.gov/index.php/regulations/export-administration-regulations-ear
  • https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern
• From the U.S. Treasury: The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.
  • https://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx

Export documentation

• https://www.trade.gov/documents-export-transaction
• https://2016.export.gov/logistics/eg_main_018121.asp

Packaging

• Packaging regulations in the target country could differ from those of the United States. Look for this in the process of due diligence.

Labels and marks

• The target market is likely to have labeling rules. Search for these rules in the process of due diligence.

Your company will face a different legal structure to that of the United States when exporting. Do your research and consult open-source legal information on the destination country. Retaining legal counsel with operations in the destination country is strongly advised. Moreover, your company should set a legal structure to protect its intellectual property. There are also varied political risks for each country. Work to understand the political dynamics of your target market and how it may affect your business.

Business relationships and customs vary from country to country. A keen understanding of these nuances will make your export experience much smoother. Hiring or consulting with someone familiar with the customs and nuances in your target market will be useful. An expert in the target market should be able to provide information on the following to promote your product:

• Language, Colors, odors, values, business norms, religious beliefs, spending habits

Consult the below resources for a basic understanding of your target market. The International Trade Administration publishes current and comprehensive Country Commercial Guides for new U.S. exporters to further assess their target markets.

• https://www.trade.gov/ccg-landing-page
• http://news.bbc.co.uk/2/hi/country_profiles/default.stm

You may need to obtain financing to fund the many start up costs to exporting – do your research to find the right financing authority. There are government authorities, the U.S. Export-Import Bank for example, that can provide payment insurance should a partner not make a payment. First, if you have chosen a sort of partnership, take care that your in-country partner is well funded and positioned for the partnership.

The U.S. Export-Import Bank assists small business exporters by protecting accounts receivable under the Export Credit Insurance program: https://www.exim.gov/what-we-do/export-credit-insurance

Consult a local U.S. bank with strong international experience to advise on Letters of Credit and facilitate payments.

Finance

The U.S. Government has several programs to provide financial assistance when exporting. These include export development and working capital financing, facilities development financing, financing for your international buyers, investment project financing.

Many of the programs are provided by the following entities: U.S. Small Business Administration, Export-Import Bank, USDA, and the Overseas Private Investment Corporation.

• Small Business Administration Export Working Capital Program
• Export Financing
• Payment
  • In vetting potential partners, you should have already evaluated that partner’s ability to pay. Programs are available from the Export-Import Bank, namely the Export Credit Insurance program, to protect accounts payable

Political Risk

Assess the political risk of your target market. Force majeure happens, and your company should strive to be prepared for such inevitabilities. Political risk comes in various forms, be it municipal statutes, national-level protests, or federal legislation. Set up a system to first understand your market, analyze exposure and appetite for political risk, and designate or hire individuals responsible for tracking and responding to political risks.

Partner Risk

Engaging in partnerships in foreign countries includes exposure to cultural misunderstandings, difficulty in communication, and thus, difficulty in decision-making. Prepare your company for partner risk.

Fraud

Remain vigilant for fraud. According to the U.S. Export-Import Bank, follow these steps to protect your company from fraud:

• Be aware that borrowers, exporters, and foreign agents may misrepresent or omit the identity of parties involved, or the authenticity of business operations to cover up fraud.
  • No clear disclosures of commissions or fees
  • Identification documents appear altered or have expired
  • Multiple changes in the financed amount requested, description of goods needed, or suppliers or exporters
  • Suspicious Financial Statements
• Financial statements can be falsified to improve cash flow, increase sales or accounts receivable
  • Discrepancies exist between tax statements, credit references, sales receipts, etc.
• Pro forma Invoices
  • Be aware that requests for quotes or product descriptions can lead to a fraudulent actor copying a legitimate supplier’s letterhead. If the product description sent to your company is not within a supplier’s line of business, if the equipment does not have a VIN number, or if the supplier’s address or phone cannot be verified, there is potential fraud.
  • View more of these steps at Ex-Im: https://grow.exim.gov/blog/seven-red-flags-protecting-against-fraud-in-trade-finance

Ensure your exports comply with U.S. Export Controls. As a U.S. exporter, federal law requires the use of the Automated Export System to report shipments valued at over $2,500, or if it requires an export license. Additionally, pay careful attention to Free Trade Agreements (FTA) that the United States has with other countries. FTAs allow duty-free access to the relevant markets.

• More information at: https://www.trade.gov/free-trade-agreements-help-center

Continue service in exporting. Join professional associations like the Midwest International Trade Association to stay informed and connected with exporters and service providers in Nebraska.

Join the Nebraska Department of Economic Development and the Nebraska Department of Agriculture on international Governor’s Trade Missions

• Governor’s Trade Missions provide significant benefits to Nebraska exporters. Nebraska Governor’s Trade Missions assist companies in meeting with target market officials, support building relationships with Nebraska delegates and international partners, and provide an opportunity to attend various conferences.