Making the Leap Into International Business
It may be tempting to sell your products in any country that will have you. However, before doing so it is important to think about some key considerations that can impact your success.
We live in a world where borders are becoming less and less defined. In our global economy, goods and services flow freely across borders, leaving many wondering how to legally export.
When engaging in international trade, there are logistical challenges that can arise which will affect your ability to import and export successfully. For example, the transport infrastructure may be poor or limited. There could also be poor communication and transportation networks, and an unreliable energy supply. Other challenges may include: complex compliance requirements, legal paperwork and long distances.
What are Some Key Considerations When Exporting Internationally?
The decision to export your product internationally is a big one and with such a multitude of options available, it can be difficult to know where you will find the best market. You should consider whether or not there is a significant demand for the product, if the country has well-defined import and export policies, and what kind of logistical challenges might arise with international trade.
The following are some things to consider when deciding if exporting your product internationally is the best idea for your company or organization:
If a country has a high demand for a product that is in short supply domestically or something new that has not been widely adopted by its own population, this may be a good place to sell. Immigration trends have also made international markets more viable.
For example, if your company is based in the United States but you find that many of your customers are immigrants who come from other countries then it may be worth exploring your options in international trade.
Choosing a Country
You should also consider how willing the country, state or province will be in terms of facilitating your needs for import and export. For example:
Do they have trade agreements with other countries?
Does the country have fair customs rules and regulations?
Will you face roadblocks trying to ship goods in and out of that particular region?
Is there ever political unrest that might lead this area into a state of emergency where your business ability to function could be at risk?
Their Import Policies
There is a strict process that must be followed in order to import products. In many countries there are import quotas for specific types of goods as well as restrictions on how much of certain items can be brought into the country. Your product may not even meet those requirements so it is important to have all the details before you decide if exporting internationally is right for you.
In some cases, certain products will be restricted or banned entirely. In other cases, a country may need to approve the product before allowing it in their borders. This can take anywhere from weeks to months. It is important to understand what kind of requirements a country has when it comes to importing products.
Some countries require that a company first receive an International Commercial Invoice before they allow them to import/export their goods legally.
A true commercial invoice describes the process by which your product was acquired, including its original value and total amount of money paid for it. This is a necessary document that can be used to establish value, determine customs taxes and accurately record the product’s import.
In addition, you will need to have certificates of origin for each item you are importing/exporting along with any other relevant documents depending on the country involved.
It is important to get this paperwork in order before your company starts doing any international business.
It is also crucial to consider the exchange rates between the US Dollar and any other currencies involved when pricing your products for export. If the currency where you are stationed has been experiencing a devaluation in their currency, then exporting your product can become attractive because it may improve the value of your profits in terms of the devaluing currency.
The value of one currency compared with another fluctuates often so conducting research on current rates is important before finalizing an agreement.
Supply and Delivery Logistics
When considering which markets to expand your business into it is also crucial to consider the time and costs associated with shipping products overseas. Shipping rates depend on various factors such as location of sender and recipient, weight and dimensions of package, method of delivery preferred by sender and recipient, etc
Transporting goods all over the world requires time, resources and attention to detail. When exporting internationally it is critical to find a shipping company that will work with you on managing customs regulations, documentation requirements, etc. Your logistics provider should be able to provide solutions for specific problems that may arise during any point in your supply chain or delivery process.
It is also helpful to research how different countries regulate customs regulations because this can determine how long it takes shipments to arrive at their destination.
Many larger companies will partner with another in a different country to facilitate sales and access to new markets. There can be benefits for both sides in this type of relationship so it is important to investigate the possibilities when contemplating expanding internationally. This can be beneficial because you can avoid some of the logistical issues associated with international trade by partnering with another company in a different country.
Another important factor to consider when deciding if expanding your business internationally is right for you, is how much time it will take to build relationships with potential clients in other countries.
As it turns out, building long-lasting relationships in foreign markets requires quite a bit of effort. It takes many months or even years before these kinds of ventures take root in foreign soil. You should only commit to an overseas expansion project if you are prepared to maintain contact with your partner companies and potential customers abroad over a long period of time.
Reaching new markets can be an incredible opportunity that allows you to potentially increase revenue by adding value to your product and building global brand awareness. Expanding into a foreign market is a good way to diversify the locations from which you receive business.
However, before entering into a foreign market it is important to consider the challenges that may arise from such endeavors. For example: the extraordinary amount of background research and due diligence needed; exchanges rates can impact pricing strategies; logistics becomes more complicated when transporting goods internationally over long distances; and building relationships takes significant effort which could become costly if not done correctly.
Navigating those challenges successfully is often in partnerships with expert managers and global teams experienced in all aspects of international supply-chain management including product design and assembly, through to packaging and point of sale branding. These successful companies diversify risk, increase revenue, reach new customers, and create a global brand awareness.