Archive for the ‘Export Assistance’ Category

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Going Global: A Virtual Toolkit for Small Businesses

April 29, 2016

Ashley Zuelke is the Senior Advisor for Export Policy, Promotion and Strategy at the International Trade Administration.  

World Trade Month logoIn recognition of World Trade Month in May, communities across the country will focus on the importance of trade and its ongoing contribution to U.S. economic and job growth. The first week of May recognizes National Small Business Week, a fitting start to the month given the role of America’s small and medium-sized business which fuel our economy. These businesses make up the vast majority of U.S. exporters and an increasing share of the value of U.S. exports.

For many small U.S. companies, however, the path to expanding globally requires a large time investment and management commitment. Many firms are not sure where to begin, who to talk to, or how to navigate available resources. As a part of the National Export Initiative/NEXT and the Trade Promotion Coordinating Committee, U.S. government agencies are committed to helping businesses tackle these challenges, and have produced a streamlined guide of federal export resources. The tools and resources we provide help answer questions regarding how to:

  1. Identify markets through independent research
  1. Assess markets of interest
  • Country Commercial Guides provide market intelligence and guidance on doing business in specific markets around the world.
  • StopFakes.gov and its Online Training Module is a good starting point for learning how to protect your Intellectual Property (IP) in markets of interest.
  • Talk to an expert:
  1. Make Connections
  • The U.S. Commercial Service can also help with:
    • Conducting background checks on potential buyers and distributors.
    • Connecting your business with pre-screened potential overseas partners.
    • Promoting your product or service to prospective buyers at trade events worldwide.
    • Meeting with international industry and government decision makers in your target market(s).
    • Navigating cultural differences.
  • Exhibit at U.S. trade shows: ITA recruits and vets foreign buyer delegations for certain shows.
  • Showcase at an overseas trade show in U.S. pavilions: Go to export.gov and search events.
  • See if your state is an awardee of the State Trade Expansion Program (STEP) matching-fund awards from the Small Business Administration. State awardees administer STEP funds to help small businesses enter and succeed in the global marketplace.
  1. Take Advantage of Financing and Insurance
  1. Navigate mechanics

    Basic Guide to Exporting Cover

    Download “A Basic Guide to Exporting” Now!

  • Making international sales online? Learn about eCommerce mechanics.
  • The U.S. Commercial Service can also help with:
    • Understanding export documentation requirements and import regulations of foreign markets.
    • Navigating U.S. government export controls, compliance, and trade financing options.
    • Overcoming trade obstacles to successfully enter international markets.
  • Logistics resources and guidance: http://www.export.gov/logistics
  • When you export any good valued at over $2,500 (or requiring a license), you must submit information on the shipment to the Automated Export System (AES). Get help on filing AES, classifying merchandise, regulations and trade data by calling 1-800-549-0595. More information available on the Global Reach blog.
  • Screen potential buyers and partners to make sure you can do business with them and that they are not on one of the U.S. government denied parties or export control lists.

All of this information and more is available through “A Basic Guide to Exporting.” SBA also has an online tool to help you develop your Export Business Plan.

Exporting can be an important way to grow your business and your bottom line. These available tools are at your disposal to help you succeed in the global marketplace.

For more information on U.S. government export programs and services, visit www.export.gov.

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“Survey Says…Foreign Market Research is Tops”

April 19, 2016

Morgan Barr is an International Economist in ITA’s Office of Trade Policy & Analysis.

What do companies need to increase their export sales? In a recent client survey, the International Trade Administration (ITA) confirmed that it is often assistance in gathering market or competitive intelligence. Most companies use in-depth industry research on foreign markets to identify which markets to target, and forecasting future business opportunities using data is especially valuable. However, many companies lack an organized approach to finding this research. The overarching finding on market intelligence can be summarized by an interviewee who expressed that, “Market research is key, however, we don’t have the ability to do it ourselves.”

ITA has a variety of resources to help companies conduct market research on potential export markets for their goods and services—providing everything from tariffs under Free Trade Agreements, detailed trade data, and country guides to industry-specific market research. Together, these resources can provide important market information for U.S. exporters looking for new markets and new opportunities. Learning more about market opportunities is also a critical step in preparing to exhibit at trade shows such as the upcoming Hannover Messe.

Data

Trade statistics to identify new markets can be found in ITA’s Trade Policy Information System, which has an easy search function that quickly provides major U.S. export and import markets by product in an easy-to-read graphical format. Also, Trade Stats Express displays the latest annual U.S. merchandise trade statistics at the national and state levels in maps, graphs, and tables tailored to the user’s needs.

The FTA Tariff Tool provides tariff information on specific products under various U.S. free trade agreements (FTAs). It shows the tariff applied on the date the FTA entered into force and how it is phased out or reduced over time under the agreement. It now contains data on the Trans-Pacific Partnership.

Top Markets and Industry Information

Top Markets Reports, written by experts from ITA’s Industry and Analysis team, are industry-specific reports, covering both goods and services industries. Each report ranks future export opportunities within a particular industry based on a sector-specific methodology and includes country case studies for identified top markets.

Just in time for Hannover Messe Trade Show, ITA released seven updated Top Markets Reports related to the themes of the show, in order to provide the latest assessment of export opportunities for U.S. companies.

Country Information

Country Commercial Guides are an excellent starting point for everything you need to know about exporting and doing business in more than 125 overseas markets. They are written by U.S. Embassy trade experts and provide critical information on everything from entry strategies for a particular market, to leading sectors for U.S. exports and investment, to customs procedures.

Market Intelligence Search

The above resources are just the beginning. In the near future, we plan to release new lines of market research reporting on www.export.gov that will replace the website’s Market Research Library. Companies will then be able to tap into hundreds of new industry-specific articles, global market insights, and other trade education materials previously unavailable. Other valuable tools, such as a New to Market Tool for identifying export prospects, are not far behind, as we move forward with initiatives to provide more digital services and information to our customers.

Where do you go from there? More than 60 percent of survey respondents sought ITA’s assistance for their overall marketing and planning needs, which also includes identifying and arranging appointments with foreign partners, distributors and buyers, as well as developing a strategy to begin or expand exporting. Along with our self-help market research resources, ITA’s U.S. Commercial Service has offices across the United States that can work together with you to develop an entire export strategy.

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Sailing Into the Wind: Three Tips to Export Success While Facing Strong Economic Headwinds

March 23, 2016

Dylan Daniels is a Senior Trade Specialist and member of ITA’s Vets Go Global Team

The global economic headwinds currently facing U.S. businesses are enough to force even the most intrepid exporter to search for safe harbors.  However by mitigating the risk inherent to international trade, you can sail into these economic headwinds with confidence.  Trusting in these three tips, you should be better prepared to navigate the turbulent waters of international commerce.

 Tip #1: Mitigate Your Foreign Exchange (FX) Exposure

From the viewpoint of a U.S. exporter who chooses to sell in foreign currencies, FX risk is the exposure to potential financial losses due to devaluation of the foreign currency against the U.S. dollar. Obviously, this exposure can be avoided by insisting on selling only in U.S. dollars.  However, such an approach may result in losing export opportunities to competitors who are willing to accommodate their foreign buyers by selling in their local currencies.

FX Risk Management options include: Non-Hedging FX Risk Management Techniques; FX Forward Hedges; and FX Options Hedges.

  • Non-Hedging FX Risk Management Techniques

The exporter can avoid FX exposure by using the simplest non-hedging technique: price the sale in a foreign currency in exchange for cash in advance.  The current spot market rate will then determine the U.S. dollar value of the foreign proceeds.  A spot transaction is when the exporter and the importer agree to pay using today’s exchange rate and settle within two business days

  • FX Forward Hedges

A forward contract enables the exporter to sell a set amount of foreign currency at a pre-agreed exchange rate with a delivery date from three days to one year into the future.  For example, U.S. goods are sold to a French company for €1 million on 60-day terms and the forward rate for “60-day euro” is 0.80 euro to the dollar.  The U.S. exporter can eliminate FX exposure by contracting to deliver €1 million to its bank in 60 days in exchange for payment of $1.25 million.

  •  FX Options Hedges

Option Hedges are used for exceptionally large transactions that have been quoted in foreign currency.  Under an FX option, the exporter acquires the right, but not the obligation, to deliver an agreed amount of foreign currency to the FX trader in exchange for dollars at a specified rate on or before the expiration date of the option.  While FX options hedges provide a high degree of flexibility, they can be significantly more costly than FX forward contracts.

 Tip #2: Insure Your Export Transaction

 The Export-Import Bank is one source for export credit insurance (ECI).  ECI protects an exporter of products and services against the risk of non-payment by a foreign buyer.  ECI generally covers commercial risks, and certain political risks that could result in non-payment.  ECI also covers currency inconvertibility, expropriation, and changes in import or export regulations.

 Tip #3: Manage Expectations with a Contract

 The exporter should negotiate a foreign sales agreement to expressly define the roles and responsibilities of the parties.  Most representatives are interested in your company’s pricing structure and product profit potential.  They are also concerned with the terms of payment; product regulation; competitors and their market shares; the amount of support provided by your firm, such as sales aids, promotional material, and advertising; training for the sales and service staff; and your company’s ability to deliver on schedule.

The contract may contain provisions that specify the actions of the foreign representative.  For example, a non-disclosure agreement, non-compete clause, and instructions on how to handle inquiries from outside their sales territory should be included.

It may be appropriate to include performance requirements, such as a minimum sales volume and an expected rate of increase.  Be sure to include an escape clause in the agreement that allows you to end the relationship safely and cleanly if the representative does not fulfill expectations.

Finally, the agreement with the foreign representative should define what laws apply to the agreement.  Even if you choose U.S. law or that of a third country, the laws of the representative’s country may take precedence.  Many suppliers define the United Nations Convention on Contracts for the International Sale of Goods (CISG, or the Vienna Convention) as the source of resolution for contract disputes, or they defer to a ruling by the International Court of Arbitration of the International Chamber of Commerce.

 By mitigating risk factors associated with international transactions you’ll have greater confidence to engage in international trade.  Moreover, by making use of these three simple tips, instead of being blown back, you’ll sail forward into the economic headwinds facing exporters today.  The U.S. Department of Commerce, including the members of its Vets Go Global team, are here to assist you take your business into new and exciting global markets.

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Richmond Export Assistance Center and Partners Bring ExporTech to Norfolk, Virginia

February 11, 2016

This post contains external links. Please review our external linking policy.

This is a guest blog by Sandra Choi, Development Analyst for foreign investment and international research at the City of Norfolk Department of Development

Last month, five companies from Norfolk, Virginia and surrounding municipalities completed ExporTech, a national export technical assistance program that helps local manufacturers develop and implement an international strategy to boost export sales. The program is jointly offered by the National Institute of Standards and Technology Manufacturing Extension Partnership and the U.S. Export Assistance Centers of the United States Department of Commerce. ExporTech applies a structured export strategy development process that assists companies in accelerating their growth.

ExportTech

Since 2007, 141 ExporTech programs have been delivered in 31 states with more than 745 participating companies.

 

Over the course of 12 weeks, senior executives from each company participated in a series of customized workshops to develop a written export plan. At the final session, their export strategies were vetted by a panel of trade professionals, including trade specialists from the International Trade Administration. After completing the program, companies will begin the implementation of their strategy alongside a robust network of partner organizations that contributed to the successful conclusion of the Commonwealth’s first ExporTech program.

Virginia’s first class of ExporTech graduates includes technology manufacturers, Descal-A-Matic, Grandwatt Electric, Mission Mobility, Netarus and Paramount Sleep. The participating companies represented the diverse manufacturing community of Norfolk and the Hampton Roads region. They ranged from start-up firms like Netarus, a manufacturer of wireless video sensor technology, to Paramount Sleep, a third generation family-owned luxury mattress manufacturer with deep roots in Norfolk. The class also included companies such as Descal-A-Matic, a green non-chemical water treatment technology company, and Grandwatt Electric, a portable light tower and diesel & gas powered generator manufacturer. Both companies have a history of international sales but wanted to develop a refined targeted plan for export growth. As a defense contractor, Mission:Mobility, a manufacturer of ‘at the edge of the network’ mobile communications equipment, wanted to target new markets as part of their strategy to diversify revenue streams.

Effectively aligning and coordinating the individual programs of federal and local organizations within the Commonwealth was crucial to the success of this pilot program in Norfolk. Through the integration of all the export-related services offered by the partner organizations and functioning as a single team, ExporTech was able to provide a holistic export roadmap for the participating companies. The U.S. Export Assistance Center (USEAC) in Richmond was a key partner to the City of Norfolk and GENEDGE Alliance, in the development and implementation of this program. The USEAC counseled companies on the fundamentals of exporting and worked with them to develop their plans. Through its global network, the Richmond USEAC is currently working to connect each company to potential overseas partners through the International Trade Administration’s Gold Key Service and other on-the-ground support in target markets. Other ExporTech partner organizations include Virginia Small Business Development Council, Old Dominion University and the Port of Virginia. Additional sponsorship was provided by FedEx Corporation and Fulton Bank.

Norfolk is setting a foundation to build a trade ecosystem that allows local firms to participate in an export-intensive economy. Central to this new economic development model is to introduce new resources that support the growth and expansion of small- and medium-sized firms. In addition to organizing technical assistance programs such as ExporTech, Norfolk introduced another key resource for exporting firms: access to capital. The Global Initiatives Fund, one of four new NorfolkFirst investment programs, will provide patient flexible capital for businesses that are looking to begin or expand their export activities. Both manufacturers and service exporters are eligible for the Global Initiatives Fund. Initially capitalized at $250,000, local firms can access the loan fund to finance a broad range of activities; participate in trade missions, connect with prospective buyers or support working capital needs. The Global Initiatives Fund is the first of its kind in Virginia and the United States. No other municipality offers direct access to capital for its trade community.

As it continues to assist the first ExporTech cohort with the implementation of their plans, the network of ExporTech organizational partners will kick off regional recruitment efforts for the second class of Virginia’s ExporTech participants in March. With trade growth becoming an important cornerstone of economic development strategies for metropolitan economies across the nation, programs like ExporTech play a crucial role in bridging the resources of the private-public sector and different levels of government to assist local companies seeking export assistance.

Since 2007, 141 ExporTech programs have been delivered in 31 states with more than 745 participating companies. Based on its recent success in Norfolk, companies in this area will continue to have the opportunity to benefit from this program.

 

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New ITA Report Highlights Jobs Supported by Product & Industry Exports

December 11, 2015

Chris Rasmussen, a Senior International Economist in the Office of Trade and Economic Analysis, is the Team Lead for Quantitative Analysis and the author of several publications on jobs supported by exports.

The International Trade Administration has released a report detailing the jobs supported by exports by specific product and also within individual industries. This report joins earlier work estimating total U.S. jobs supported by exports, jobs supported by state goods exports, and jobs supported by exports by destination.

When thinking about the relationship between exports and jobs the natural tendency is to focus on the workers employed in the industry that produces the final product that is exported. For example, a statistic for U.S. exports of chemical products may conjure up images of workers employed in chemical plants wearing hardhats and other protective gear.

However, products are not produced in isolation from beginning to end in a single industry, with the production of any product generally requiring the use of inputs from other industries. As a result of these interrelationships between industries in the production process, the export of a product will impact employment in multiple industries in addition to the industry that produced the export.

In the chemical products example, the production and export of those products will not only affect employment in the chemical industry, but also employment in industries such as petroleum and coal products, transportation, and other services whose products are used by the chemical industry.

By the same token, production and employment in the chemical industry will be impacted not only by the export of chemical products, but also by the export of agricultural products and products made of plastic and rubber that use products from the chemical industry as inputs in their production.

This report uses data capturing these interrelationships to look at the impact of exports on employment throughout the supply chain. This report finds that as a group, manufacturing industries have the highest share, 27 percent, of their employment supported by exports. The report further finds that although 60 percent of all export-supported jobs are supported by the export of goods, 67 percent of all export-supported jobs are jobs located within service industries.

In fact, the report indicates that for every job within manufacturing industries supported by the export of manufactured products there is an additional job supported in service industries by the export of those manufactured products.

Visit our website to learn more about jobs supported by exports.

 

 

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Five Things Entrepreneurs Should Know About Export Controls

December 2, 2015

This post originally appeared on the Department of Commerce blog.

The U.S. Commercial Service is having a Export Control Seminar in Salt Lake City, Utah on December 10, 2015. Learn more and register today.

A few weeks ago, Secretary of Commerce Penny Pritzker addressed more than 1100 industry representatives during the Bureau of Industry and Security’s (BIS) annual conference to discuss export control policies and highlight how, BIS has an enormous impact on the nation’s safety and competitiveness.

Secretary of Commerce

Secretary of Commerce Penny Pritzker Addresses the 2015 BIS Annual Update Conference

As National Entrepreneurship Month comes to an end, we will continue to celebrate American innovation. Entrepreneurs launching new businesses or looking to export can look to BIS as a resource and learn how export control laws may be relevant to their operations.

Export controls help protect U.S. national security and foreign policy, and address proliferation concerns. By administering and enforcing export controls, BIS seeks to keep some of the most sensitive goods and technologies out of the most dangerous hands.  BIS requires businesses to submit license applications for certain exports, and enforces the law against those who do not get required licenses. An export license grants permission to conduct a specified export transaction–to ship an item or to release software source code or technology. BIS then issues licenses after a careful review of the facts, and with input from other U.S. government agencies, including the State and Defense Departments.

The key issues involved in the review of a license, or whether a license is required include: What you are exporting, how the item will be used, as well as where and who the ultimate recipient will be. Although many items are not affected by export controls, high technology items and items destined for sanctioned countries, persons, or entities will often require a license from BIS; this includes commercial as well as some military items.

Here are the top five things entrepreneurs should know about export controls:

  1. BIS offers services for understanding export controls.  BIS offers a variety of services to help you comply, including live seminars, an online training room, and regularly scheduled conference calls on export control regulatory changes and Cuba updates.  We also offer consultations with export counselors who are also available by phone at (202) 482–4811, or (949) 660–0144 for our West Coast office.
  2. Export controls affect high tech industries, including items for commercial as well as military use. There is a misconception that export controls only affect military use items.  Export controls also apply to sensitive or high technology commercial items. Examples include high-end machine tools and semiconductors, encryption software, night vision camera equipment, and technology for unmanned aerial systems.  These and other items may require a license prior to shipment or transmission out of the United States.
  3. Exports to certain countries may be uniquely affected by export controls. Sanctions and other regulations can impose special restrictions that affect the export of many items—including “low tech” items in some cases—to particular destinations. BIS has a role in administering economic sanctions on countries such as Cuba, Russia, and Iran, among others. Exports destined for sanctioned countries will often require a license before they are exported, even if the items are not high tech.
  4. Export controls may affect companies and research institutions who employ foreign nationals or who collaborate with foreign nationals on research, even within the United States.  A “deemed export” is the release of technology or source code to a foreign national in the United States.  This is because our export control regulations treat such a release of controlled technology as an export to the individual’s home country.  Therefore, a license may be required before you release controlled technology to a foreign national who does not hold a U.S. green card.
  5. There are exceptions.  Even if your export would otherwise require a license under our regulations, it may qualify for a “license exception.”  A license exception is an authorization that may allow you to export or reexport, under stated conditions, some items that would otherwise require a license.  Four of our most common exceptions include allowing for replacement parts (License Exception RPL), shipments to certain government end-users (GOV), temporary exports (such as for exhibition, for tools of trade, or for repairs abroad) (TMP), and limited value shipments (LVS).  In addition, in 2011, BIS added a new license exception called Strategic Trade Authorization (STA).  STA facilitates trade with a list of 36 allied countries, and includes deemed exports to nationals of such countries.

For more information, please visit the BIS website at www.bis.doc.gov or follow us on Twitter @BISgov.

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The Great Mall of China

November 30, 2015

This is a guest blog by Doug Barry PhD, who until recently was a Senior International Trade Specialist with ITA’s Office of Communications and Digital Initiatives  

Despite slowing growth and a welter of government regulations, there are still good opportunities to be had in the China market, says the 2015 edition of the China Country Commercial Guide (CCG). Published by the U.S. Commercial Service in China, the CCG, now available online in bite-size nuggets, points out that while many industries remain closed to foreign participants, you’re on much more enticing ground if you’re selling medical equipment, health supplements, baby and environmental products and services, and using e-commerce to avoid most taxes and certifications to reach Chinese consumers directly.

E-commerce is rapidly increasing in China, and in May 2015 accounted for around 10.6% of all retail sales. There are over 632 million Internet users in China, of whom 47% are online shoppers. That’s slightly less than the entire population of the United States.

“The Chinese market remains strong, the retail sector underdeveloped, and logistics surprisingly improved,” says Joshua Halpern, a Commercial Officer with the U.S. Embassy in Beijing. “That combination, along with an expanding middle class, government policies that drive domestic consumption, especially in the 2nd and 3rd-tier cities and a degradation of trust for domestic-made products presents U.S. exporters with unprecedented opportunities across a comparatively streamlined and low-cost export channel.”
E-commerce sales in China totaled $449 billion in 2014, up 49.3% from $300.7 billion in 2013, according to the Chinese government’s National Bureau of Statistics (CNBS). In comparison, web sales in the U.S. totaled almost $305 billion in 2014, up 15.4% from 2013, according to Department of Commerce estimates (February 2015). China’s  e-commerce market is growing more than three times faster than that of the United States. Although the official average income of the Chinese online shopper is much less than their American counterparts, personal income of the Chinese middle class grew by 10% (CNBS). The Chinese research firm iResearch forecasts that China’s e-Commerce market will grow at a 27% annual rate over the next four years.

Feet on the ground, or mail it in

U.S. Companies wanting to sell products via Chinese e-commerce platforms, including Alibaba and its affiliates Tao Bao, Tmall and Tmall International, can choose a more traditional approach by establishing a physical presence in China, or use cross-border e-commerce to sell the products directly from abroad. A presence in China can be a subsidiary company, a JV, a wholly-owned entity or a local distributor/agent. The CCG contains information on these different options for establishing a presence in China and the Department of Commerce offices across China can help you identify the right option for your business.

Within the massive growth of e-commerce in China is an approach called “bonded online shopping,” the cross border element of online shopping via government-approved websites that enables foreign brands to sell products overseas. In cross-border e-commerce, goods imported by means of bonded import will be exempt from certain import duties, consumption tax and value-added tax, and are only levied with Personal Postal Articles Tax. Cross-border e-Commerce is in a trial stage, and is likely to experience significant changes as regulations are put in place.

Also, since potential Chinese distributors comb through popular e-commerce marketplaces in search of new products, your product’s presence could lead to orders for containers, rather than oneseys and twoseys (small quantities), which still could be considerable given China’s population of 1.3 billion.

The latest CCG also contains information on the U.S. Government’s export assistance resources in China, which are most significant in the world. Good thing, too, because being successful at e-commerce in China often requires more than a passive listing or virtual store on one or more marketplaces.

Another trend to keep an eye out for is what Commercial Officer Joshua Halpern calls “C-commerce”, which is the shift in consumer behavior away from static one-directional e-commerce platform shopping toward content-rich sites and social media groups that discuss and recommend products and lifestyle activities they are passionate about. C-commerce allows Chinese consumers to trust recommendations from passionate friends in their “inner circle”. U.S. Commercial Services offices in China can advise you on developing a proper e-commerce strategy, including local service providers who can help market your product on China social media.

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