When it comes to a potential customer base, many manufacturers are just scratching the surface. The International Trade Administration estimates that less than 1% of 30 million U.S. companies export their goods worldwide. This means most companies are missing out on a bevy of customers: Two-thirds of the world’s purchasing power is outside the U.S., according to the U.S. Small Business Administration.
With an unsteady economy making domestic sales more challenging, tapping into overseas markets can boost your bottom line and make you less dependent on U.S. consumers. Before you decide to export, there are several issues to consider.
Applicable Market Places
If you are thinking about exporting, you need to figure out where to sell. Finding the best markets for your product is essential — after all, you would not sell snow shoes on Caribbean islands.
Several government websites, including BuyUSA.gov, Export.gov, and Trade.gov provide useful information that can help you find the right markets. English-speaking countries, such as the United Kingdom, Ireland, New Zealand, and Australia are often easy to work with because of minimal language and shipping barriers.
In addition to researching geographical markets, consider the exporting method that works best for you. Manufacturers have multiple options for exporting, including setting up sales offices in foreign countries, fulfilling orders from the U.S., or working with local distributors. You will need to consider the costs involved in each method, such as transportation costs, wages for workers abroad, and applicable taxes.
The Internet has made doing business abroad exponentially easier, but only if consumers can find you. Setting up a user-friendly website is the best way to get your message out to potential customers and distributors.
Whether you partner with local distributors or sell directly to local consumers, you will need to network to make your exporting venture successful. Attend industry trade shows and make contacts with industry insiders to find out who is shopping in your chosen markets.
Organizations such as chambers of commerce in foreign countries, U.S. embassies abroad, and consulates in the U.S. also may know contacts who are interested in establishing connections with American companies. If they have an existing network you can tap, they will also be able to share company background with you that can help you decide whether to work with a particular business.
After you have identified possible contacts, develop a mail and online campaign. Write letters and e-mails to each potential partner, telling them about your background and your products, and ask for the names and addresses of appropriate distributors or stores to contact.
If you receive names in response, get in touch with those contacts to introduce your company and learn more about their own companies to see if you’re a good match. You will want to know:
- What they import
- How many branches they have and where they are located
- More information about their operations, including expected future growth and their assets and liabilities
- What kinds of products they are interested in, how they distribute products, and what terrain they cover
Request a catalog or other distribution materials, if the company has them. You also may want to develop a questionnaire if you are planning to contact multiple firms.
When you are ready to start exporting your products, you will need to know how much you will pay in export tariffs.
Export tariffs are taxes that certain foreign countries collect when your product crosses their borders. Businesses traditionally have had to slog through complicated agreements written by various governing bodies to determine the tariffs they must pay. In some agreements, the tariff schedules alone would number nearly 1,000 pages.
The Fair Trade Agreement Tariff Tool eliminates this headache — companies can learn exactly how much they will pay in tariffs by visiting export.gov/FTA and clicking on “FTA TariffTool”. The tool has some limitations, however. It covers “industrial good” products, but not agriculture or textile goods. And it only includes trading partners with which the U.S. has a trade agreement. Furthermore, product descriptions for tariff schedules may not be published in English. Talk to your advisor if you need assistance determining the tariff for a particular country.
A Global Game Plan
For manufacturers with a solid exporting strategy in place, it is a great time to enter the global market because a large percentage of the world’s purchasing power is outside the U.S. Your advisor can help you come up with a game plan for exporting success.
6 Questions To Consider Before You Export
Whether you are considering exporting to improve profitability and growth or simply to capitalize on a new opportunity, assessing your goals is an important first step. Consider these questions:
- Are you able to research international markets and risks thoroughly?
- Can your current staff manage international marketing efforts?
- Do you have the necessary resources to handle exporting, such as reliable transportation?
- Are you willing to be flexible when it comes to modifying your products and marketing strategies to fit different markets?
- If the country you are entering speaks a different language, will you able to communicate?
- What type of international business experience do you have, and can you use it effectively to make exporting successful for your business?
Contact us at (215) 441.4600 if you have questions or would like to discuss how this topic may impact your business.