How far is Nebraska’s reach? Growth opportunities for Nebraska businesses are increasingly found in international markets. Domestic competition is fierce and free trade agreements have opened up markets in Japan, Australia, Chile, Singapore, Jordan, Israel, Canada, Mexico, and Central America, creating more opportunities abroad for U.S. businesses. If you are interested in exporting your products abroad, take a look at the “Steps to Exporting” below.

The benefits to exporting are many:

  • Businesses can supplement an already saturated or sluggish domestic market, providing wider markets and greater profits.
  • They can increase efficiency in production by increasing output and spreading the fixed costs over a greater number of units produced.
  • Cyclical demand for products may be leveled out by exporting to countries where seasons are the reverse of ours, thereby increasing sales.
  • Progressive companies can smooth the transition between gearing up to provide new and improved products, and gearing down the production of older models, thereby maintaining current markets while expanding sales to new international markets.

The Nebraska Department of Economic Development international trade team, located in Lincoln and Omaha, assists Nebraska businesses enter new international markets and expand sales in current export markets.

Trade missions, trade shows, partnership and international business activities support the Departments’ mission statement: “To provide quality leadership and services that enable Nebraska communities, businesses, and people to succeed in a global economy.”

The Nebraska Department of Economic Development has established a variety of programs and services to promote Nebraska’s economy through the expansion of foreign markets for Nebraska products.

The International Trade Team is here to provide:

  • One-on-one counseling & technical assistance
  • Initial market research
  • Training seminars & workshops
  • Trade show promotion
  • Governor-led trade missions
  • Foreign trade offices located in Japan and Germany
  • Referral to local export service providers

We network locally, nationally, and internationally to provide the best information and assistance available. This network includes the U.S. Department of Commerce, U.S. Small Business Administration, U.S. Customs, U.S. embassies and consulates abroad, Nebraska Department of Agriculture, Nebraska Business Development Center, Nebraska District Export Council, Midwest International Trade Association, University of Nebraska, international bankers, transportation companies, freight forwarders, attorneys, accountants, and experienced exporters across the state.

Exporting becomes a thread that runs throughout a business, affecting all aspects of the business (i.e., marketing, management, personnel, warehousing, production, quality control, accounting, etc.) Export development is an ongoing process, not an event. It’s a long-term commitment for our businesses, as well as the agencies supporting their efforts.

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Why Export?

Your company can benefit significantly from exporting if positioned correctly, acknowledging the risks and hurdles along the way. Like many pursuits in business, exporting must be approached with a long-term horizon in mind. For those companies willing to overcome the hurdles of exporting, the benefits can be well worth it. Consider the following advantages to exporting:

  1. Increased Sales
    1. In finding your niche in the international market, you will expand your business beyond domestic sales and diversify
  2. Higher Profits
  3. Reduced market vulnerability
    1. Exporting helps your company diversify from a single market, providing resilience in economic downturns
  4. New experience
    1. Your company will learn a tremendous amount from exporting. Your talent pool will increase as those interested in international business are hired into the company. Additionally, many of the lessons learned by exporting are applicable to your domestic business.
  5. Added competitiveness
    1. The pursuit of making a better product domestically and for the international market will no doubt assist your company’s foothold domestically
  6. Consider the following challenges inherent to exporting:
    1. Increased costs
      1. Personnel, equipment, supply chain
    2. Increased commitment
      1. The process of exporting, from research to execution and the first delivery, is enduring and fraught with challenges. Your company must acknowledge these challenges to get the product to market with the expectation that the first delivery is only the beginning of the commitment to that new market. It may take months or years to reach breakeven in the new market. Prepare the company accordingly.
    3.  Documentation
      1. Export and import documentation is an important part of this process. Your product must comply with the laws and regulations of the destination country.
    4.  Competition
      1. You are entering a new market with new competitors. Your company must be prepared to highlight the advantages of your product over the domestic, and other foreign competition
    5. Linguistic and cultural
      1. You may not currently have staff that speak the language of the destination country. Moreover, you may not be completely familiar with the culture and business customs of that country. Be prepared to adapt, hire the right people, and work to build relationships.

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Production Capacity

  • 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.

Staff

  • 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.

Customer Profiles

  • 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 your focus should be for exporting. Analytics and Customer Relationship Management (CRM) software are helpful to pinpoint this information.

Product Modifications

  • Consider what product modifications are required by target market regulations. There will be costs related to retooling, packaging and labeling, etc. Your company should be prepared for this to happen.

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Market Research

  • 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
        • Your company should understand where your current skillset falls in relation to the target market.

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Marketing

  • 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

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International Conferences

There are likely dozens of international trade shows or conferences to visit and show your product. Follow the calendar of events in your industry and in your target market. 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?

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After determining your capacity to export and market strategy, you need to determine how to get your product to the market. First, choose the method by which to get your product to customers (air, ocean, truck). Familiarize yourself with INCOTERMS, packing, labeling, insurance, and documentation requirements. According to the International Trade Administration, Incoterms are a widely-used terms of sale. They are a set of 11 internationally recognized rules which define the responsibilities of sellers and buyers. Incoterms specifies who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities. Importantly, identify a freight forwarder and customs broker. Pack and label your products properly to ensure they are delivered in good condition and directed properly.

Logistics
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
          • Airfreight is 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.

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Method of Market Entry

How will you approach market entry?

      • 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 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 in 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 knowhow.
      • 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 capability to meet market demands.
      • Acquisition
        • Your company may consider acquiring a company in the target market. Acquisition will take time as employees begin to adapt to your company culture.

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Promotion

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.  View  more  at  the  link  below.
  • 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.

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Calendar of Events

    • Understand the key events and shows in your industry in the target market. Prepare to attend to make contacts and promote your product.

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

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.

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Cultural and Linguistic Considerations

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.

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Be diligent and careful in managing financing, payment, and risk when exporting. 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.

Consult a local U.S. bank with strong international experience to advise on Letters of Credit and facilitate payments. Please visit the list of Nebraska partners for this at the “International Resources” tab under “Expand your Business.”

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.

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Risk

  • Political Risk
    • Assess the political risk of your target market. Force majeure happen, and your company 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 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 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

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  • 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.
  • 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.

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Have Questions About Exporting or Expanding Internationally

Susan R Rouch

Export Development Manager