Tradeology, the ITA Blog

Debbie Dirr is an International Trade Specialist for the U.S. Commercial Service

It’s just before 9:00 am on a Monday morning when I settle in for another day’s work as an International Trade Specialist with the U.S. Commercial Service Cincinnati. I manage Cincinnati’s satellite office at Wright State University in Dayton, Ohio, serving as a consultant to U.S. businesses in order to help them plan strategies for export growth. I receive about 30 calls or emails a week from companies in my territory, which encompasses 24 counties in Southern Ohio. When it comes to export assistance, each business that I help has unique needs. There’s no ‘one size fits all.

Recently, the U.S. Commercial Service—with more than 100 offices across the United States and in U.S. embassies and consulates in more than 75 countries—further enhanced its customized outreach to businesses through the launching of a six-themed, How to Export video series. The series, which runs from November 2016 through early 2017, started with Get Ready to Export. The release of the second video topic, Plan your Market Entry Strategy, is an opportune time for me to share some insights into two key elements of export planning: Selecting International Markets and Researching International Markets.

Researching Markets

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Regarding international market research, the most important element is having someone on the ground in a foreign market who can tell you what is going on and verify data and international market research.

For example, companies usually have an idea of where they want to export, but it may not always be the best market for a particular product. That’s where research can make all the difference. I once had a client who wanted to sell capital equipment to Chile for the mining industry. The company was sure that Chile would be a good market. Through a phone discussion with colleagues in the U.S. Embassy-Santiago who knew the industry, we determined that local projects relied on low-cost labor with little or no demand for that equipment. Instead, we turned to other markets. So a ‘negative’ finding can be just as valuable in saving U.S. companies time and resources.

U.S. businesses can obtain market information through many channels, such as agents, distributors, news articles or industry associations. The U.S. Commercial Service’s worldwide ‘boots-on-the-ground’ trade professionals also author Country Commercial Guides that provide the latest market intelligence for more than 140 countries. The agency also offers customized market research.

I would also offer the following advice: If you receive multiple inquiries from specific regions, think about locating a distributor who can introduce your products into markets more efficiently. This, in turn, may lower your shipping costs because of volume, which translates into giving your customers a better price and quicker delivery. Look at your competitors’ websites to see where their international distributors are located. This is another sign that can point your company in the right direction. Take advantage of country and industry trade data found on export.gov and consider the 20 Free Trade Agreement (FTA) countries where trade barriers have been reduced or eliminated for U.S. businesses.

Selecting International Markets

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In selecting markets, businesses need to be aware that some markets will be more challenging than others. Exporting to Canada is a great first market for a company, rather than targeting a distant and complex market such as China. It’s important for a company to evaluate the costs, expenses and difficulties of going into a given market prior to selling there.

In addition, here are some questions that you should address:

• What are your firm’s internal capabilities for exporting?
• What standards or regulations might apply to your products or services?
• Is compliance with foreign requirements worthwhile or even cost-prohibitive?
• What are the competitive factors in a market (both domestic and foreign)?

Many problems arise because management may fail to coordinate communication among sales, accounting, operations, or other departments. If overlooked, this can cause problems with customs clearance, shipping decisions, and even getting paid. By communicating and planning ahead, your company will be better prepared to handle exporting to new markets.

For example, if a U.S. company is exporting to Saudi Arabia, there are many requirements for the commercial invoice alone. Some of these include a statement that the products being shipped are of U.S. origin, any foreign components must be listed with country of origin and percentages, and the invoice has to be certified/notarized by the U.S. exporter’s local chamber of commerce or sent to a Saudi Arabian consulate for certification.

Finally, it’s important to think regionally. For example, by selling to a country like Singapore, a gateway to Southeast Asia, your firm will have easier access to many other Southeast Asian countries.

There are many other elements of planning your export strategy as well. Later this month, I will post a blog on export counseling. Now, it’s time to meet another client.