Chapter 1Export StrategyAssessing a Product's Export PotentialThere are several ways to gauge the overseas market potential of products and services. (For ease of reading, products are mentioned more than services in this guide, but much of the discussion applies to both.) One of the most important ways is to assess the product's success in domestic markets. If a company succeeds at selling in the U.S. market, there is a good chance that it will also be successful in markets abroad, wherever similar needs and conditions exist. In markets that differ significantly from the U.S. market, some products may have limited potential. Those differences may be climate and environmental factors, social and cultural factors, local availability of raw materials or product alternatives, lower wage costs, lower purchasing power, the availability of foreign exchange (hard currencies like the dollar, the British pound, and the Japanese yen), government import controls, and many other factors. If a product is successful in the United States, one strategy for export success may be a careful analysis of why it sells here, followed by a selection of similar markets abroad. In this way, little or no product modification is required. If a product is not new or unique, low-cost market research may already be available to help assess its overseas market potential ( refer to Chapter 3, for more information on market research techniques and resources). In addition, international trade statistics, available in many local libraries, can give a preliminary indication of overseas markets for a particular product by showing where similar or related products are already being sold in significant quantities. One of the best sources for U.S. export-import statistics is the National Trade Data Bank (NTDB), which can be accessed at many libraries and U.S. Department of Commerce district offices across the country. The NTDB is also available on CD-ROM or on the Stat-USA web site for a very reasonable price. If a product is unique or has important features that are hard to duplicate abroad, chances are good for finding an export market. For a unique product, competition may be nonexistent or very slight, while demand may be quite high. Finally, even if U.S. sales of a product are now declining, sizeable export markets may exist, especially if the product once did well in the United States but is now losing market share to more technically advanced products. Countries that are less developed than the United States may not need state-of-the-art technology and may be unable to afford the most sophisticated and expensive products. Such markets may instead have a surprisingly healthy demand for U.S. products that are older or that are considered obsolete by U.S. market standards. Making the Export DecisionOnce a company determines it has exportable products, it must still consider other factors, such as the following:
A more detailed list of questions is shown in the table on. Answers to these questions can help a company not only decide whether or not to export but also determine what methods of exporting should be initially used. The Value of PlanningMany companies begin export activities haphazardly, without carefully screening markets or options for market entry. While these companies may or may not have a measure of success, they may overlook better export opportunities. In the event that early export efforts are unsuccessful because of poor planning, the company may even be misled into abandoning exporting altogether. Formulating an export strategy based on good information and proper assessment increases the chances that the best options will be chosen, that resources will be used effectively, and that efforts will consequently be carried through to completion. The purposes of the export plan are, first, to assemble facts, constraints, and goals and, second, to create an action statement that takes all of these into account. The statement includes specific objectives; it sets forth time schedules for implementation; and it marks milestones so that the degree of success can be measured and help motivate personnel. The first draft of the export plan may be quite short and simple, but it should become more detailed and complete as the planners learn more about exporting and their company's competitive position. At least the following ten questions should ultimately be addressed: 1. What products are selected for export development? What modifications, if any, must be made to adapt them for overseas markets? 2. What countries are targeted for sales development? 3. In each country, what is the basic customer profile? What marketing and distribution channels should be used to reach customers? 4. What special challenges pertain to each market (competition, cultural differences, import controls, etc.), and what strategy will be used to address them? 5. How will the product's export sales price be determined? 6. What specific operational steps must be taken and when? 7. What will be the time frame for implementing each element of the plan? 8. What personnel and company resources will be dedicated to exporting? 9. What will be the cost in time and money for each element? 10. How will results be evaluated and used to modify the plan? One key to developing a successful plan is the participation of all personnel who will be involved in the exporting process. All aspects of an export plan should be agreed upon by those who will ultimately execute them. A clearly written marketing strategy offers six immediate benefits: 1. Because written plans display their strengths and weaknesses more readily, they are of great help in formulating and polishing an export strategy. 2. Written plans are not as easily forgotten, overlooked, or ignored by those charged with executing them. If deviation from the original plan occurs, it is likely to be due to a deliberate choice to do so. 3. Written plans are easier to communicate to others and are less likely to be misunderstood. 4. Written plans allocate responsibilities and provide for an evaluation of results. 5. Written plans can be of help in seeking financing. They indicate to lenders a serious approach to the export venture. 6. Written plans give management a clear understanding of what will be required and thus help to ensure a commitment to exporting. In fact, a written plan signals that the decision to export has already been made. This last advantage is especially noteworthy. Building an international business takes time; it is usually months, sometimes even several years, before an exporting company begins to see a return on its investment of time and money. By committing to the specifics of a written plan, top management can make sure that the firm will finish what it begins and that the hopes that prompted its export efforts will be fulfilled. The Planning Process and the ResultA crucial first step in planning is to develop broad consensus among key management on the company's goals, objectives, capabilities, and constraints. Answering the questions listed in the table on is one way to start. The first time an export plan is developed, it should be kept simple. It need be only a few pages long, since important market data and planning elements may not yet be available. The initial planning effort itself gradually generates more information and insight that can be incorporated into more sophisticated planning documents later. From the start, the plan should be viewed and written as a management tool, not as a static document. For instance, objectives in the plan should be compared with actual results as a measure of the success of different strategies. Furthermore, the company should not hesitate to modify the plan and make it more specific as new information and experience are gained. A detailed plan is recommended for companies that intend to export directly. Companies choosing indirect export methods may require much simpler plans. An outline of an export plan is presented in the table on. Approaches to ExportingThe way a company chooses to export its products can have a significant effect on its export plan and specific marketing strategies. The basic distinction among approaches to exporting relates to a company's level of involvement in the export process. There are at least four approaches, which may be used alone or in combination: 1. Passively filling orders from domestic buyers who then export the product. These sales are indistinguishable from other domestic sales as far as the original seller is concerned. Someone else has decided that the product in question meets foreign demand. That party takes all the risk and handles all of the exporting details, in some cases without even the awareness of the original seller. (Many companies take a stronger interest in exporting when they discover that their product is already being sold overseas.) 2. Seeking out domestic buyers who represent foreign end users or customers. Many U.S. and foreign corporations, general contractors, foreign trading companies, foreign government agencies, foreign distributors and retailers, and others in the United States purchase for export. These buyers are a large market for a wide variety of goods and services. In this case a company may know its product is being exported, but it is still the buyer who assumes the risk and handles the details of exporting. 3. Exporting indirectly through intermediaries. With this approach, a company engages the services of an intermediary firm capable of finding foreign markets and buyers for its products. Export management companies (EMCs), export trading companies (ETCs), international trade consultants, and other intermediaries can give the exporter access to well-established expertise and trade contacts. Yet, the exporter can still retain considerable control over the process and can realize some of the other benefits of exporting, such as learning more about foreign competitors, new technologies, and other market opportunities. 4. Exporting directly. This approach is the most ambitious and difficult, since the exporter personally handles every aspect of the exporting process from market research and planning to foreign distribution and collections. Consequently, a significant commitment of management time and attention is required to achieve good results. However, this approach may also be the best way to achieve maximum profits and long-term growth. With appropriate help and guidance from the Department of Commerce, state trade offices, freight forwarders, international banks, and other service groups, even small or medium-sized firms, can export directly if they are able to commit enough staff time to the effort. For those who cannot make that commitment, the services of an EMC, ETC, trade consultant, or other qualified intermediary are indispensable. Approaches number 1 and 2 represent a substantial proportion of total U.S. sales, perhaps as much as 30 percent of U.S. exports. They do not, however, involve the firm in the export process. Consequently, this guide concentrates on approaches three and 4. There is no single source or special channel for identifying domestic buyers for overseas markets. In general, they may be found through the same means that U.S. buyers are found, for example, trade shows, mailing lists, industry directories, and trade associations. If the nature of the company's goals and resources makes an indirect method of exporting the best choice, little further planning may be needed. In such a case, the main task is to find a suitable intermediary firm that can then handle most export details. Firms that are new to exporting or are unable to commit staff and funds to more complex export activities may find indirect methods of exporting more appropriate. Using an EMC or other intermediary, however, does not exclude all possibility of direct exporting for the firm. For example, a U.S. company may try exporting directly to such "easy" nearby markets as Canada, Mexico, or the Bahamas while letting its EMC handle more ambitious sales to Egypt or Japan. An exporter may also choose to gradually increase its level of direct exporting later, after experience has been gained and sales volume appears to justify added investment. For more information on different approaches to exporting and their advantages and disadvantages, refer to Chapter 4,. Consulting advisers before making these decisions can be helpful. The next chapter presents information on a variety of organizations that can provide this type of help--in many cases, at no cost. Table 1-1: Management Issues Involved in the Export Decision Management objectives
Experience
Management and personnel
Production capacity
Financial capacity
Table 1-2: Sample Outline for an Export Plan Table of ContentsExecutive Summary (one or two pages maximum) Introduction: Why This Company Should ExportPart I--Export Policy Commitment StatementPart II--Situation/Background Analysis
Part III--Marketing Component
Part IV--Tactics: Action Steps
Part V--Export Budget
Part VI--Implementation Schedule
Addenda: Background Data on Target Countries and Market
Chapter 2Export AdviceFor companies making initial plans to export or to export in new areas, considerable advice and assistance are available at little or no cost. It is easy, through lack of experience, to overestimate the problems involved in exporting or to get embroiled in difficulties that can be avoided. For these and other good reasons, it is important to get expert counseling and assistance from the beginning. This chapter gives a brief overview of sources of assistance available through federal, state, and local government agencies and in the private sector. Other chapters in this guide give more information on the specialized services of these organizations and how to use them. Information on where to find these organizations can be found in the appendices. Some readers may feel overwhelmed at first by the number of sources of advice available. Although it is not necessary to go to all of these resources, it is valuable to know at least a little about each of them and to get to know several personally. Each individual or organization contacted can contribute different perspectives based on different experience and skills. While having many sources to choose from can be advantageous, deciding where to begin can also be difficult. Some advice from experienced exporters may be helpful in this regard. Recognizing this point, President George Bush created the Trade Promotion Coordinating Committee (TPCC) and charged it with harnessing all the resources of the federal government to serve American exporting business. The TPCC conducts export conferences, coordinates trade events and missions that cross-cut federal agencies, and operates an export information center that can help exporters find the right federal program to suit their needs. For more information, call the Trade Information Center at (800) USA-TRADE). In general, however, the best place to start is the nearest U.S. Department of Commerce Export Assistance Center or district office, which can not only provide export counseling in its own right but also direct companies toward other government and private sector export services. Department of CommerceThe scope of services provided by the Department of Commerce (DOC) to exporters is vast, but it is often overlooked by many companies. Most of the information and programs of interest to U.S. exporters are concentrated in the department's International Trade Administration (ITA), of which the subdivision called the U.S. and Foreign Commercial Service (US&FCS) maintains a network of international trade specialists in the United States and commercial officers in foreign cities to help American companies do business abroad. By contacting the nearest DOC Export Assistance Center or district office, the U.S. exporter can tap into all assistance programs available from ITA and all trade information gathered by U.S. embassies and consulates worldwide. Addresses and phone numbers for all Export Assistance Centers and district offices, listed by state, are given in Appendix III,. The following sections detail the kinds of assistance offered. Export Assistance Available in the United StatesDepartment of Commerce OfficesThe Commerce Department has undergone some reorganization in recent years, most notably through its U.S. Export Assistance Centers. USEACs offer a full range of federal export programs and services under one roof. Clients receive assistance by professionals from the SBA, the Department of Commerce, the Export-Import Bank, and other public and private organizations. Each USEAC provides export marketing and trade finance assistance, customized counseling, and customer service. Fifteen USEACs opened in 1994 and 1995; they are located in Atlanta, Baltimore, Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Miami, Los Angeles (Long Beach), Seattle, St. Louis, New Orleans, New York, and Philadelphia. Other Department of Commerce Export Assistance Centers, district, and branch offices in cities throughout the United States and Puerto Rico can also provide information and professional export counseling to business people. Each district office is headed by a director and supported by trade specialists and other staff. Branch offices usually consist of one trade specialist. These professionals can counsel companies on the steps involved in exporting, help them assess the export potential of their products, target markets, and locate and check out potential overseas partners. In fact, because Commerce has a worldwide network of international business experts, district offices can answer almost any question exporters are likely to ask--or put them in touch with someone who can. Each district office can offer information about
Most DOC offices also maintain business libraries containing Commerce's latest reports as well as other publications of interest to U.S. exporters. Important data bases that provide trade leads, foreign business contacts, in-depth country market research, export-import trade statistics, and other valuable information, are often available at these offices. The National Trade Data Bank (NTDB) is the best-known of these data bases. District Export CouncilsBesides the immediate services of its own offices, the Department of Commerce gives the exporter direct contact with seasoned exporters experienced in all phases of export trade. Commerce Department offices work closely with district export councils (DECs) in every state, comprising hundreds of business and trade experts who volunteer to help U.S. firms develop solid export strategies. These DECs assist in many of the workshops and seminars on exporting arranged by the district offices or they may sponsor their own. DEC members may also provide direct, personal counseling to less experienced exporters, suggesting marketing strategies, trade contacts, and ways to maximize success in overseas markets. Assistance from DECs may be obtained through the local Department of Commerce offices with which they are affiliated. Export Seminars and Educational ProgrammingIn addition to individual counseling sessions, an effective method of informing local business communities of the various aspects of international trade is through the conference and seminar program. Each year, Commerce district offices conduct several thousand conferences, seminars, and workshops on topics such as export documentation and licensing procedures, country-specific market opportunities, export trading companies, and U.S. trade promotion and trade policy initiatives. The seminars are usually held in conjunction with DECs, local chambers of commerce, state agencies, and world trade clubs. For information on scheduled seminars across the country, or for educational programming assistance, contact the nearest district office. Assistance Available From DOC Specialists in Washington, D.C.Among the most valuable resources available to U.S. exporters are the hundreds of trade specialists, expert in various areas of international business, that the Department of Commerce has assembled in its Washington headquarters. Country counseling. Every country in the world is assigned to an individual country desk officer or a regional office, such as the Asia Business Center. These desk officers and regional offices in Commerce's International Economic Policy (IEP) area look at the needs of an individual U.S. firm wishing to sell in a particular country, taking into account that country's overall economy, trade policies, political situation, and other relevant factors. Each desk officer and regional office collects up-to-date information on the country's trade regulations, tariffs and value-added taxes, business practices, economic and political developments, trade data and trends, market size and growth, and so on. Desk officers also participate in preparing Commerce's country-specific market research reports, available from the U.S. Government Printing Office, through the NTDB, and on the World Wide Web. The value of IEP's market data may be gauged from the fact that this agency develops much of the country-specific background for negotiating positions of the U.S. Trade Representative. Individual country desk information questions should go to the Trade Information Center, Tel: (800) USA-TRADE; Fax: (202) 482-4473. For a complete list of country desk officers and regional offices, see . A partial list follows:
Africa
Office of Near East
Asia and Pacific
Asia Business Center (ABC)
Europe
Business Information Service for the Newly
Central and Eastern Europe Business Information Center (CEEBIC)
Japan
Western Hemisphere
Office of NAFTA Product and service sector counseling. Complementing IEP's country desks are the industry desk officers of Commerce's Trade Development area. They are grouped in units:
Technology and Aerospace Industries
Office of Aerospace
Office of Computers and Business Equipment
Office of Microelectronics, Medical Equipment and Instrumentation
Office of Telecommunications
Basic Industries
Office of Automotive Affairs
Office of Metals, Materials, and Chemicals
Office of Energy and Infrastructure
Environmental Technologies Exports
Services Industries and Finance
Office of Export Trading Company Affairs
Office of Finance
Office of Service Industries
Textiles, Apparel and Consumer Goods Industries
Office of Textiles and Apparel
Office of Consumer Goods The industry desk officers participate in preparing reports on the competitive strength of selected U.S. industries in domestic and international markets. They also promote exports for their industry sectors through marketing seminars, trade fairs, foreign buyer groups, business counseling, and information on market opportunities. If you are interested in exporting agricultural products, contact the Foreign Agricultural Service, Trade Assistance and Promotion Office (TAPO); Tel: (202) 720-7420; Fax: (202) 205-9728; Web site: www.gas.usda.gov. See for more information on USDA assistance. Other assistance. Rounding out the Trade Development area is a unit that cuts across industry sector issues. The Office of Trade and Economic Analysis in the International Trade Administration gathers, analyzes, and disseminates trade and investment data for use in trade promotion and policy formulation. It also includes specialists in technical areas of international trade finance, such as countertrade and barter, foreign sales corporations, export financing, and the activities of multilateral development banks. For more information, contact the nearest Department of Commerce office or call
Office of Trade and Economic Analysis Export Marketing Information and Assistance Available OverseasUS&FCS Overseas PostsMuch of the information about trends and actual trade leads in foreign countries is gathered on site by the commercial officers of the US&FCS. About half of the US&FCS American officers working in nearly 70 countries have been hired from the private sector, many with international trade experience. All understand firsthand the problems encountered by U.S. companies in their efforts to trade abroad. In addition, a valued asset of the US&FCS is a group of about 500 foreign nationals, usually natives of the foreign country, who are employed in the U.S. embassy or consulate and bring with them a wealth of personal understanding of local market conditions and business practices. The US&FCS staff overseas provides a range of services to help companies sell abroad: background information on foreign companies, agency-finding services, market research, business counseling, assistance in making appointments with key buyers and government officials, and representations on behalf of companies adversely affected by trade barriers. (Some of the more important services are described fully in Chapter 7,.) U.S. exporters usually tap into these services by contacting their local Department of Commerce office. While exporters are strongly urged to contact their district office before going overseas, U.S. business travelers abroad may also contact U.S. embassies and consulates directly for help during their trips. District offices can provide business travel facilitation assistance before departure by arranging advance appointments with embassy personnel, market briefings, and other assistance in cities to be visited. US&FCS posts also cooperate with overseas representatives of individual states. Many states have such representation in some overseas markets, and their efforts are closely coordinated with the resources of the US&FCS. Other Commerce Export ServicesBesides ITA, a number of other Department of Commerce agencies offer export services. Bureau of Export AdministrationThe under secretary for export administration is responsible for U.S. export controls. ( Refer to Chapter 11, , for more information.) Assistance in complying with export controls can be obtained directly from local district offices or from the Exporter Counseling Division, Bureau of Export Administration (BXA) Office of Exporter Services. BXA also has two field offices that specialize in counseling on export controls and regulations: the Western Regional Office, and the Northern California Branch Office. Some Bureau of Export Administration contacts follow. For a more complete list of BXA offices, see .
BXA, Office of Exporter Services
Exporter Counseling Division
Export Seminar Division
Regulatory Policy Division
Compliance & Special Licenses Division
BXA Western Regional Office, Orange County, CA
BXA N. Calif. Branch Office, Santa Clara County, CA Trade Adjustment AssistanceTrade Adjustment Assistance, part of Commerce's Economic Development Administration, helps firms that have been adversely affected by imported products to adjust to international competition. Companies eligible for trade adjustment assistance may receive technical consulting to upgrade operations such as product engineering, marketing, information systems, export promotion, and energy management. The federal government may assume up to 75 percent of the cost of these services. For more information, contact Trade Adjustment Assistance at (202) 482-2127; Fax: (202) 482-0466; Web site: www.doc.gov/eda/ Foreign Requirements for U.S. Products and ServicesThe National Center for Standards and Certification Information (NCSCI), established in 1965, provides information on U.S., foreign, and international voluntary standards; government regulations; and rules of conformity assessment for non-agricultural products. The Center serves as a referral service and focal point in the United States for information about standards and standards-related information. NCSCI staff respond to inquiries, maintain a reference collection of standards and standards-related documents, and serve as the U.S. inquiry point for information to and from foreign countries. For information about foreign standards and certification systems, contact
NCSCI NIST maintains a GATT/WTO (General Agreement on Tariffs and Trade/World Trade Organization) hotline at Tel: (301) 975-4041 with a recording that reports on the latest notifications of proposed foreign regulations that may affect trade. A second hotline for EU (European Union) standards is Tel: (301) 921-4164. Exporters can also get information from the nongovernmental American National Standards Institute (ANSI) at Tel: (212) 642-4900; Fax: (212) 302-1286; Email: info@ansi.org; Web site: www.ansi.org. Foreign Metric RegulationsThe Metric Program at NIST provides exporters with guidance and assistance on matters relating to U.S. transition to the metric system. It can also give referrals to metric contacts in state governments. For more information, contact
The Metric Program Minority Business Development Agency (MBDA)The MBDA identifies minority business enterprises (MBEs) in selected industries to increase their awareness of their relative size and product advantages and to aggressively take them through the advanced stages of market development. Through an interagency agreement with the ITA, MBDA provides information on market and product needs worldwide. MBDA and ITA coordinate MBE participation in Matchmaker and other trade delegations. MBDA provides counseling through the Minority Business Development Center network to help MBEs prepare international marketing plans and promotional materials and to identify financial resources. For general export information, the field organizations of both MBDA and ITA provide information kits and information on local seminars.
Minority Business Development Agency Fishery Products ExportsThe National Oceanic and Atmospheric Administration (NOAA) assists seafood exporters by facilitating access to foreign markets. NOAA's National Marine Fisheries Service (NFMS) provides inspection services for fishery exports and issues official U.S. government certification attesting to the findings.
Office of Industry and Trade
Inspection Services Division Bureau of the CensusThe Bureau of the Census is the primary source of trade statistics that break down the quantity and dollar value of U.S. exports and imports by commodity (product) and country. Commerce district offices can help retrieve Census export statistics for exporters who want to identify potential export markets for their products. Firms interested in more extensive statistical data can contact the Bureau of the Census at the numbers given below.
Census Customer Services
Foreign Trade Information
Bureau of Export Administration
Shippers' export declarations assistance Department of StateThe Department of State has a diverse staff capable of providing U.S. exporters with trade contacts. These staff members include bureau commercial coordinators, country desk officers, policy officers in the functional bureaus (such as the Bureau of Economic and Business Affairs), and all U.S. embassies and consular posts abroad. The Department of State provides commercial services in some countries and regions without US&FCS offices. Their addresses and telephone numbers are published in the directory titled Key Officers of Foreign Service Posts, available from the U.S. Government Printing Office (Tel: (202) 512-1800; Fax: (202) 512-2250; Web site: www.access.gpo.gov/su_docs; Price: $5.50). The ambassador takes the lead in promoting U.S. trade and investment interests in every U.S. embassy. All members of U.S. diplomatic missions abroad have the following continuing obligations:
The State Department can be reached at Tel: (202) 647-4000 or on the internet at www.state.gov. Publications. The State Department has a number of publications which may be of interest to exporters. Country Commercial Guides , which offer a wealth of practical information on over 100 countries. The State Department also publishes Background Notes, pamphlets on nearly every country in the world. These are updated irregularly. Both are available on the NTDB, on the State Department's web site (in the DOSFAN archives) and through NTIS or the Government Printing Office. Bureau of Economic and Business AffairsThe Bureau of Economic and Business Affairs has primary responsibility within the Department of State for (1) formulating and implementing policies regarding foreign economic matters, trade promotion, and business services of an international nature and (2) coordinating regional economic policy with other bureaus. The bureau is divided into five units or deputates: communications; energy, resources and sanctions; finance and investment; trade; and transportation (aviation and maritime). The five deputy assistant secretaries who lead these units develop U.S. policy, administer programs, negotiate, and represent the Department before Congress, U.S. business and industry, and international organizations.
Office of the Coordinator for Business Affairs Regional bureausRegional bureaus, each under the direction of an assistant secretary of state, are responsible for U.S. foreign affairs activities in specific major regions of the world. Bureau economic policy staff can be reached at the following numbers:
Bureau of African Affairs
Bureau of East Asian and Pacific Affairs
Bureau of European Regional Affairs
Bureau of Near East Affairs
Bureau of Western Hemisphere Affairs
Bureau of South Asian Affairs Country desk officers within the bureaus maintain day-to-day contact with overseas diplomatic posts and provide country-specific economic and political analysis and commercial counseling to U.S. business. Cooperation between State and CommerceThe Departments of State and Commerce provide many services to U.S. business jointly. Firms interested in establishing a market for their products or expanding sales abroad should first seek assistance from their nearest Department of Commerce Export Assistance Center or district office, which can tap into the worldwide network of State and Commerce officials serving in U.S. missions abroad and in Washington. Small Business AdministrationThe Small Business Administration (SBA) coordinates its international trade programs and services with other federal agencies through the Trade Promotion Coordinating Committee (TPCC). SBA's Office of International Trade (OIT) encourages small business exports and assists small businesses seeking to export. SBA/OIT helps small firms finance their export sales through the Export Working Capital Program, through which SBA provides a 75 percent guarantee on private-sector loans. SBA/OIT also works with SBA's resource partners to provide individual counseling to small business concerns to assess the feasibility of their export marketing plans and to determine and obtain necessary data to help package loan applications. Training and technical assistance is often available to new-to-export small companies. These programs are provided through more than 100 field offices in cities throughout the United States. ( Refer to Appendix III, , for addresses and telephone numbers.) The no-cost development assistance services include the following:
A description of SBA loan programs may be found in Chapter 14, under. For information on any of the programs funded by SBA, contact the nearest SBA district office, call the SBA Answer Desk at Tel: (800) 8-ASK-SBA, or go to the SBA web site on the Internet at www.sba.gov. For a list of SBA offices, refer to Appendix III,. Department of AgricultureThe U.S. Department of Agriculture (USDA) export promotion efforts are centered in the Foreign Agricultural Service (FAS), whose marketing programs are discussed in Chapter 7 in. However, other USDA agencies also offer services to U.S. exporters of agricultural products: the Economic Research Service, the Animal and Plant Health Inspection Service, the Food Safety and Inspection Service, and the Federal Grain Inspection Service. A wide variety of other valuable programs is offered, such as promotion of U.S. farm products in foreign markets; services of commodity and marketing specialists in Washington, D.C.; trade fair exhibits; publications and information services; and financing programs. For more information on programs contact the director of
AgExport Services Division To contact other USDA offices mentioned above: Animal and Plant Health Inspection Service (APHIS)
Animal Exports
Animal Products Exports
Plant Exports (Phytosanitary Certificates)
Federal Grain Inspection Service
Economic Research Service
Food Safety and Inspection Service (FSIS)
Foreign Agricultural Service (FAS) U.S. Trade Assistance and Promotion Office (TAPO)The Trade Assistance and Promotion Office of the Foreign Agricultural Service (FAS) serves as the first point of contact for persons who need information on foreign markets for agricultural products. The TAPO staff can provide basic export counseling and direct you to the appropriate USDA offices to answer your specific technical questions on exporting. In addition, the staff can provide country and commodity specific Foreign Market Information Reports , which focus on best market prospects and contain contact information on distributors and importers. Extensive information on the Foreign Agricultural Service is also available through the FAS home page on Internet (http://ffas.usda.gov/ffas).
Trade Assistance and Promotion Office (TAPO) Agriculture Trade and Marketing Information CenterThe Agriculture Trade and Marketing Information Center has ceased operations. Economic Research Service (ERS)ERS provides in-depth economic analysis on agricultural economies, trade policies of foreign countries, world agricultural trade and development issues, and on their linkages with the U.S. food and fiber economy. ERS analyses show how factors influencing demand (population, income, and tastes), production variables (inputs and technology), foreign governments' domestic and trade policies and programs (price controls, environmental and food safety laws, and tariffs), macroeconomic conditions (exchange rates and debt), and major events (breakup of the former USSR), affect countries' agricultural production, consumption, and trade; international food and fiber prices; and U.S. food and fiber competitiveness. ERS widely disseminates information and analyses on international agricultural trade and food aid and development through regional and commodity reports, bulletins and updates, periodicals, and electronic databases.
Economic Research Service (ERS) The Foreign Market Development ProgramThe Foreign Market Development Program, also known as the cooperator program, is administered by the Foreign Agricultural Service of the U.S. Department of Agriculture. The goal of the program is to develop, maintain, and expand long-term export markets for U.S. agricultural products. Created 40 years ago, the program fosters a trade promotion partnership between USDA and U.S. agricultural producers and processors who are represented by nonprofit commodity or trade associations called cooperators. Under this partnership, USDA and the cooperators pool their technical and financial resources to conduct market development activities outside the United States. Participants in the program include approximately 40 groups representing specific U.S. commodity sectors, such as feed grains, wheat, soybeans, rice, tallow, dairy cattle, red meats, poultry, and forest products. These nonprofit groups are funded by their members, including individual farmers and ranchers, specialized producers or breeders, farmer cooperatives, and processors and handlers. Other cooperators in the USDA program include the National Association of State Departments of Agriculture and four State Regional Trade Groups representing the agricultural interests of the eastern, western, southern, and mid-American states. For more information about the cooperator program, contact
Marketing Operations Staff The U.S. International Trade Commission (USITC)The USITC is an independent, nonpartisan, quasi-judicial federal agency. Established by Congress in 1916 as the U.S. Tariff Commission (the Trade Act of 1974 changed its name to the U.S. International Trade Commission), the agency has broad investigative powers on matters of trade. The USITC is a national resource where trade data are gathered and analyzed. The data are provided to the President and Congress as part of the information on which U.S. trade policy is based. The Office of External Relations is the USITC's primary liaison with the public and the news media. External Relations issues all USITC news releases, responds to inquiries, produces the agency's annual report, and offers a variety of brochures, pamphlets, and other materials to enhance public understanding of the ITC, its mission, and its role in U.S. international trade matters. The Trade Remedy Assistance Office assists the public and small businesses seeking benefits or relief under U.S. trade laws. The office offers general information concerning remedies and benefits available under the trade laws of the United States, and it provides technical and legal assistance and advice to small businesses seeking those remedies and benefits. The Office of the Secretary maintains a public reading room, open during agency hours, where researchers, journalists, and other interested parties may review public files containing non-confidential information for each USITC investigation. Photocopies of documents contained in the public files may be ordered for a fee from an outside duplicating firm. No on-site photocopying is available. The USITC also maintains the National Library of International Trade, one of the most extensive libraries in the United States specializing in international trade. The library is located on the third floor of the USITC Building. The ITC Law Library is located on the sixth floor of the USITC Building. Both are open to the public during agency hours.
U.S. International Trade Commission State GovernmentsState economic development agencies, departments of commerce, and other departments of state governments often provide valuable assistance to exporters. State export development programs are growing rapidly. In many areas, county and city economic development agencies also have export assistance programs. The aid offered by these groups typically includes the following:
Appendix III, , lists the agencies in each state responsible for export assistance to local firms. Also included are the names of other government and private organizations, with their telephone numbers and addresses. Readers interested in the role played by state development agencies in promoting and supporting exports may also wish to contact
National Association of State Development Agencies To determine if a particular county or city has local export assistance programs, contact the appropriate economic development agency. Appendix III, , includes contact information for some major cities. Commercial BanksMore than 300 U.S. banks have international banking departments with specialists familiar with specific foreign countries and various types of commodities and transactions. These large banks, located in major U.S. cities, maintain correspondent relationships with smaller banks throughout the country. Larger banks also maintain correspondent relationships with banks in most foreign countries or operate their own overseas branches, providing a direct channel to foreign customers. International banking specialists are generally well informed about export matters, even in areas that fall outside the usual limits of international banking. If they are unable to provide direct guidance or assistance, they may be able to refer inquirers to other specialists who can. Banks frequently provide consultation and guidance free of charge to their clients, since they derive income primarily from loans to the exporter and from fees for special services. A good source of information on international banks is the Thomson Polk World Directory. This annual publication lists banks located around the world. It is available from Thomson Financial Publishing, 4709 W. Golf Road, 6th Floor, Skokie, IL 60076; Tel: (800) 321-3373; Price: $309 for the annual edition; $345 for a one time purchase. Many banks also have publications available to help exporters. These materials often cover particular countries and their business practices and can be a valuable tool for initial familiarization with foreign industry. Finally, large banks frequently conduct seminars and workshops on letters of credit, documentary collections, and other banking subjects of concern to exporters. Among the many services a commercial bank may perform for its clients are the following:
Export IntermediariesExport intermediaries are of many different types, ranging from giant international companies, many foreign owned, to highly specialized, small operations. They provide a multitude of services, such as performing market research, appointing overseas distributors or commission representatives, exhibiting a client's products at international trade shows, advertising, shipping, and arranging documentation. In short, the intermediary can often take full responsibility for the export end of the business, relieving the manufacturer of all the details except filling orders. Intermediaries may work simultaneously for a number of exporters on the basis of commissions, salary, or retainer plus commission. Some take title to the goods they handle, buying and selling in their own right. Products of a trading company's clients are often related, although the items usually are noncompetitive. One advantage of using an intermediary is that it can immediately make available marketing resources that a smaller firm would need years to develop on its own. Many export intermediaries also finance sales and extend credit, facilitating prompt payment to the exporter. For more information on using export intermediaries refer to Chapter 4,. World Trade Centers and International Trade ClubsLocal or regional world trade centers and international trade clubs are composed of area business people who represent firms engaged in international trade and shipping, banks, forwarders, customs brokers, government agencies, and other service organizations involved in world trade. These organizations conduct educational programs on international business and organize promotional events to stimulate interest in world trade. World trade centers (WTCs) or affiliated associations are located in major trading cities throughout the world. By participating in a local association, a company can receive valuable and timely advice on world markets and opportunities from business people who are already knowledgeable on virtually any facet of international business. Another important advantage of membership in a local world trade club is the availability of benefits--such as services, discounts, and contacts--in affiliated clubs from foreign countries. The World Trade Centers Association now has nearly 200 active member associations worldwide and more than 100 planned for the near future. Refer to Appendix III, for a WTC near you or check the World Trade Centers Association Web site at www.wtca.org/ for listings of WTCs and their services. Chambers of Commerce and Trade AssociationsMany local chambers of commerce and major trade associations in the United States provide sophisticated and extensive services for members interested in exporting. Among these services are the following:
In addition, some industry associations can supply detailed information on market demand for products in selected countries or refer members to export management companies. Most trade associations play an active role in lobbying for U.S. trade policies beneficial to their industries. Industry trade associations typically collect and maintain files on international trade news and trends affecting manufacturers. Often they publish articles and newsletters that include government research. American Chambers of Commerce AbroadA valuable and reliable source of market information in any foreign country is the local chapter of the American chamber of commerce. These organizations are knowledgeable about local trade opportunities, actual and potential competition, periods of maximum trade activity, and similar considerations. American chambers of commerce abroad usually handle inquiries from any U.S. business. Detailed service, however, is ordinarily provided free of charge only for members of affiliated organizations. Some chambers have a set schedule of charges for services rendered to nonmembers. For contact information on American chambers in major foreign markets, refer to Appendix IV,. International Trade Consultants and Other AdvisersInternational trade consultants can advise and assist a manufacturer on all aspects of foreign marketing. Trade consultants do not normally deal specifically with one product, although they may advise on product adaptation to a foreign market. They research domestic and foreign regulations and also assess commercial and political risk. They conduct foreign market research and establish contacts with foreign government agencies and other necessary resources, such as advertising companies, product service facilities, and local attorneys. These consultants can locate and qualify foreign joint venture partners as well as conduct feasibility studies for the sale of manufacturing rights, the location and construction of manufacturing facilities, and the establishment of foreign branches. After sales agreements are completed, trade consultants can also ensure that follow-through is smooth and that any problems that arise are dealt with effectively. Trade consultants usually specialize by subject matter and by global area or country. For example, firms may specialize in high-technology exports to the Far East. Their consultants can advise on which agents or distributors are likely to be successful, what kinds of promotion are needed, who the competitors are, and how to deal with them. They are also knowledgeable about foreign government regulations, contract laws, and taxation. Some firms may be more specialized than others; for example, some may be thoroughly knowledgeable on legal aspects and taxation and less knowledgeable on marketing strategies. Many large accounting firms, law firms, and specialized marketing firms provide international trade consulting services. When selecting a consulting firm, the exporter should pay particular attention to the experience and knowledge of the consultant who is in charge of its project. To find an appropriate firm, advice should be sought from other exporters and some of the other resources listed in this chapter, such as the Department of Commerce district office or local chamber of commerce. Consultants are of greatest value to a firm that knows exactly what it wants. For this reason, and because private consultants are expensive, it pays to take full advantage of publicly funded sources of advice before hiring a consultant. Chapter 3Market ResearchTo be successful, exporters must assess their markets through market research. Exporters engage in market research primarily to identify their marketing opportunities and constraints within individual foreign markets and also to identify and find prospective buyers and customers. Market research includes all methods that a company uses to determine which foreign markets have the best potential for its products. Results of this research inform the firm of
A firm may begin to export without conducting any market research if it receives unsolicited orders from abroad. Although this type of selling is valuable, the firm may discover even more promising markets by conducting a systematic search. A firm that opts to export indirectly ( see ) by using an intermediary such as an export management company (EMC) or an export trading company (ETC) may wish to select markets to enter before selecting the intermediary, since many EMCs and ETCs have strengths in some markets but not in others. A firm may research a market by using either primary or secondary data resources. In conducting primary market research, a company collects data directly from the foreign marketplace through interviews, surveys, and other direct contact with representatives and potential buyers. Primary market research has the advantage of being tailored to the company's needs and provides answers to specific questions, but the collection of such data is time-consuming and expensive. When conducting secondary market research, a company collects data from compiled sources, such as trade statistics for a country or a product. Working with secondary sources is less expensive and helps the company focus its marketing efforts. Although secondary data sources are critical to market research, they do have limitations. The most recent statistics for some countries may be more than two years old. Product breakdowns may be too broad to be of much value to a company. Statistics on services are often unavailable. Finally, statistics may be distorted by incomplete data-gathering techniques. Yet, even with these limitations, secondary research is a valuable and relatively easy first step for a company to take. It may be the only step needed if the company decides to export indirectly through an intermediary, since the other firm may have advanced research capabilities. Methods of Market ResearchBecause of the expense of primary market research, most firms rely on secondary data sources. Secondary market research is conducted in three basic ways: 1. By keeping abreast of world events that influence the international marketplace, watching for announcements of specific projects, or simply visiting likely markets. For example, a thawing of political hostilities often leads to the opening of economic channels between countries. 2. By analyzing trade and economic statistics. Trade statistics are generally compiled by product category and by country. These statistics provide the U.S. firm with information concerning shipments of products over specified periods of time. Demographic and general economic statistics such as population size and makeup, per capita income, and production levels by industry can be important indicators of the market potential for a company's products. 3. By obtaining the advice of experts. There are several ways of obtaining expert advice:
Gathering and evaluating secondary market research can be complex and tedious. However, several publications are available that can help simplify the process. The following approach to market research refers to these publications and resources described later in this chapter. A Step-by-Step Approach to Market ResearchThe U.S. company may find the following approach useful. 1. Screen potential markets.
2. Assess targeted markets.
3. Draw conclusions.After analyzing the data, the company may conclude that its marketing resources would be applied more effectively to a few countries. In general, efforts should be directed to fewer than 10 markets if the company is new to exporting; one or two countries may be enough to start with. The company's internal resources should help determine its level of effort. The following section describes the publications that have been mentioned and includes additional sources. Because there are many research sources, the firm may wish to seek advice from a Department of Commerce Export Assistance Center or district office ( refer to Appendix III,). Sources of Market ResearchThere are many domestic, foreign, and international sources of information concerning foreign markets. Several of these sources are given here, and others may be found in the bibliography (Appendix V,). Available information ranges from simple trade statistics to in-depth market surveys. Trade statistics indicate total exports or imports by country and by product and allow an exporter to compare the size of the market for a product among various countries. Some statistics also reflect the U.S. share of the total country market in order to gauge the overall competitiveness of U.S. producers. By looking at statistics over several years, an exporter can determine which markets are growing and which are shrinking. Market surveys provide a narrative description and assessment of particular markets along with relevant statistics. The reports are often based on original research conducted in the countries studied and may include specific information on both buyers and competitors. Potential exporters may find many of the reports referred to in this section at a Department of Commerce district office ( refer to Appendix III,) or at a business or university library. In addition, the Foreign Trade Reference Room in the Department of Commerce offers extensive trade statistics. The Foreign Trade Reference Room is in Room 2233 of the main Commerce Department Building. Contact the staff there at Tel: (202) 482-2185; Fax: (202) 482-4614. The NTDB is a source for much of the following information. Call Stat-USA at (202) 482-1986 for more information on the NTDB; Fax: (202) 482-2164; Email: stat-usa@doc.gov; Web site: www.stat-usa.gov. The following sources fall into two broad categories--general information resources and industry- or country-specific information resources. Each category is divided into several subgroups. General Information SourcesOne of the best sources of information is personal interviews with private and government officials and experts. A surprisingly large number of people in both the public and private sectors are available to assist exporters interested in any aspect of international market research. Either in face-to-face interviews or by telephone, these individuals can provide a wealth of market research information. In the private sector, sources of market research expertise include local chambers of commerce, world trade centers or clubs, and trade associations. In the federal government, industry and commodity experts are available through the Department of Commerce, USDA, and SBA. In addition, these agencies provide the following publications, many of which can be found in local libraries. Sources of General Information
Internet connection charges are $50 per quarter or $150 per year for unlimited access to the STAT-USA site (NTDB and EBB).
Set your communications software to no parity, 8 data bits, and 1 stop bit.
The NTDB can be purchased in the form of CD-ROM discs (for $59 per monthly issue or $575 for a 12-month subscription) or it may be accessed on the Internet through Stat-USA. The NTDB is also available at over 1,100 federal depository libraries nationwide. Call the Trade Information Center at (800) USA-TRADE for a list of these libraries. For more information, or to order, contact Stat-USA at Tel: (800) STAT-USA or (202) 482-1986; Fax: (202) 482-2164; Email: stat-usa@doc.gov; Web site: www.stat-usa.gov.
Worldwide General Information
General Industry and Agriculture InformationForeign Agricultural Service Publications
The following FAS publications may be ordered from the National Technical Information Service (NTIS), 5285 Port Royal Road, Springfield, VA 22161; Tel: (703) 605-6060; Fax: (703) 605-6900; Email: info@ntis.fedworld.gov; Web site: www.fedworld.gov.
Country and Area Information
Detailed Product- and Industry-Specific Data ResourcesU.S. Government Product and Industry Resources
Private Sector Product and Industry Resources
Top Export TargetsThe lists below show the top markets for these U.S. commodities in 1996. It may give you some ideas about where to start your market research. The countries are listed alphabetically within each category. Air Conditioning & Refrigeration Equipment
Aircraft and Parts
Automotive Parts and Accessories
Building Products
Computer Software
Computers and Peripherals
Drugs and Pharmaceuticals
Electrical Power Systems
Electronics
Environmental Technologies
Instrumentation
Medical Instruments and Equipment
Telecommunications Equipment
Sporting Goods & Recreational Equipment
Chapter 4Methods of Exporting and Channels of DistributionThe most common methods of exporting are indirect selling and direct selling ( refer to Chapter 1,). In indirect selling, an export intermediary such as an EMC or an ETC normally assumes responsibility for finding overseas buyers, shipping products, and getting paid. In direct selling, the U.S. producer deals directly with a foreign buyer. The paramount consideration in determining whether to market indirectly or directly is the level of resources a company is willing to devote to its international marketing effort. These are some other factors to consider when deciding whether to market indirectly or directly:
Distribution Considerations
Indirect ExportingThe principal advantage of indirect marketing for a smaller U.S. company is that it provides a way to penetrate foreign markets without the complexities and risks of direct exporting. Several kinds of intermediary firms provide a range of export services. Each type of firm offers distinct advantages for the U.S. company. Commission AgentsCommission or buying agents are finders for foreign firms that want to purchase U.S. products. They seek to obtain the desired items at the lowest possible price and are paid a commission by their foreign clients. In some cases, they may be foreign government agencies or quasi-governmental firms empowered to locate and purchase desired goods. Foreign government purchasing missions are one example. Export Management CompaniesAn export management company (EMC) acts as the export department for one or several producers of goods or services. It solicits and transacts business in the names of the producers it represents or in its own name for a commission, salary, or retainer plus commission. Some EMCs provide immediate payment for the producer's products by either arranging financing or directly purchasing products for resale. Typically, only larger EMCs can afford to purchase or finance exports. EMCs usually specialize either by product or by foreign market or both. Because of their specialization, the best EMCs know their products and the markets they serve very well and usually have well-established networks of foreign distributors already in place. This immediate access to foreign markets is one of the principal reasons for using an EMC, since establishing a productive relationship with a foreign representative may be a costly and lengthy process. One disadvantage in using an EMC is that a manufacturer may lose control over foreign sales. Most manufacturers are properly concerned that their product and company image be well maintained in foreign markets. An important way for a company to retain sufficient control in such an arrangement is to carefully select an EMC that can meet the company's needs and maintain close communication with it. For example, a company may ask for regular reports on efforts to market its products and may require approval of certain types of efforts, such as advertising programs or service arrangements. If a company wants to maintain this type of relationship with an EMC, it should negotiate points of concern before entering an agreement, since not all EMCs are willing to comply with the company's concerns. Export Trading CompaniesAn export trading company (ETC) facilitates the export of U.S. goods and services. Like an EMC, an ETC can either act as the export department for producers or take title to the product and export for its own account. Therefore, the terms ETC and EMC are often used interchangeably. A special kind of ETC is a group organized and operated by producers. These ETCs can be organized along multiple- or single-industry lines and can represent producers of competing products. Export Trading Company Act of 1982The goal of the Export Trading Company Act of 1982 is to stimulate U.S. exports by (1) promoting and encouraging the formation of export management and export trading companies; (2) expanding the options available for export financing by permitting bank holding companies to invest in ETCs and reducing restrictions on trade finance provided by financial institutions; and (3) reducing uncertainty about applying U.S. antitrust law to export operations. This legislation allows banks, for the first time in recent history, to make equity investments in commercial ventures that qualify as ETCs. In addition, for the first time, the Export-Import Bank of the United States (Ex-Im Bank) is allowed to make working capital guarantees to U.S. exporters. Through the Office of Export Trading Company Affairs (OETCA) within the ITA, the U.S. Department of Commerce promotes the formation and use of U.S. export intermediaries and issues export trade certificates of review providing limited immunity from U.S. antitrust laws. OETCA informs the business community of the benefits of export intermediaries through conferences, presentations before trade associations and civic organizations, and publications. The major publication on this subject is the Export Trading Company Guidebook (GPO S/N 003-009-00523-0), available for $15 through the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402; Tel: (202) 512-1803; Fax: (202) 512-2250; Web site: www.access.gpo.gov/su_docs. OETCA provides counseling to businesses seeking to take advantage of the act. OETCA also maintains the Contact Facilitation Service (CFS) data base, a listing of U.S. producers of goods and services and of organizations that provide trade facilitation services. Under a public-private sector arrangement, the CFS data base is published annually in a directory entitled The Export Yellow Pages , which is available free from local Department of Commerce offices or on the NTDB. The directory provides users with the names and addresses of banks, EMCs, ETCs, freight forwarders, manufacturers, and service organizations and names the export products or export-related services that these firms supply. By obtaining CFS registration forms from Commerce district offices, firms can register in the data base free of charge and be listed in subsequent editions of The Export Yellow Pages . Certificates of ReviewThe certificates of review are issued by the Secretary of Commerce with the concurrence of the U.S. Department of Justice. Any U.S. corporation or partnership, any resident individual, or any state or local entity may apply for a certificate of review. A certificate can be issued to an applicant if it is determined that the proposed "export trade activities and methods of operation" will not result in a substantial lessening of domestic competition or restraint of trade within the United States. For the conduct covered by the certificate, its holder and any other individuals or firms named as members are given immunity from government suits under U.S. federal and state antitrust laws. In private party actions, liability is reduced from treble to single damages, greatly reducing the probability of nuisance suits. Moreover, in the event of private litigation involving conduct covered by the certificate of review, a prevailing certificate holder recovers the costs of defending the suit, including reasonable attorney's fees. The certificate of review program provides exporters with an antitrust "insurance policy" intended to foster joint activities where economies of scale and risk diversification can be achieved. The act also amends the Sherman Antitrust Act and the Federal Trade Commission Act to clarify the jurisdictional reach of these statutes to export trade. Both acts now apply to export trade only if there is a "direct substantial and reasonably foreseeable" effect on domestic or import commerce of the United States or the export commerce of a U.S. competitor. The guidelines for the certificate of review program can be found at 50 FR 1786, and the regulations can be found at 50 FR 1804 (15 CFR Part 325). Firms and individuals interested in additional information should contact
Office of Export Trading Company Affairs Export Agents, Merchants, or RemarketersExport agents, merchants, or remarketers purchase products directly from the manufacturer, packing and marking the products according to their own specifications. They then sell overseas through their contacts in their own names and assume all risks for accounts. In transactions with export agents, merchants, or remarketers, a U.S. firm relinquishes control over the marketing and promotion of its product, which could have an adverse effect on future sales efforts abroad. For example, the product could be underpriced or incorrectly positioned in the market, or after-sales service could be neglected. On the other hand, the effort required by the manufacturer to market the product overseas is very small and may lead to sales that otherwise would take a great deal of effort to obtain. Piggyback MarketingPiggyback marketing is an arrangement in which one manufacturer or service firm distributes a second firm's product or service. The most common piggybacking situation is when a U.S. company has a contract with an overseas buyer to provide a wide range of products or services. Often, this first company does not produce all of the products it is under contract to provide, and it turns to other U.S. companies to provide the remaining products. The second U.S. company thus piggybacks its products to the international market, generally without incurring the marketing and distribution costs associated with exporting. Successful arrangements usually require that the product lines be complementary and appeal to the same customers. Direct ExportingThe advantages of direct exporting for a U.S. company include more control over the export process, potentially higher profits, and a closer relationship to the overseas buyer and marketplace. These advantages do not come easily, however, since the U.S. company needs to devote more time, personnel, and corporate resources than are needed with indirect exporting. When a company chooses to export directly to foreign markets, it usually makes internal organizational changes to support more complex functions. A direct exporter normally selects the markets it wishes to penetrate, chooses the best channels of distribution for each market, and then makes specific foreign business connections in order to sell its product. The rest of this chapter discusses these aspects of direct exporting in more detail. Organizing for ExportingA company new to exporting generally treats its export sales no differently from domestic sales, using existing personnel and organizational structures. As international sales and inquiries increase, however, the company may separate the management of its exports from that of its domestic sales. The advantages of separating international from domestic business include the centralization of specialized skills needed to deal with international markets and the benefits of a focused marketing effort that is more likely to lead to increased export sales. A possible disadvantage of such a separation is the less efficient use of corporate resources due to segmentation. When a company separates international from domestic business, it may do so at different levels in the organization. For example, when a company first begins to export, it may create an export department with a full- or part-time manager who reports to the head of domestic sales and marketing. At later stages a company may choose to increase the autonomy of the export department to the point of creating an international division that reports directly to the president. Larger companies at advanced stages of exporting may choose to retain the international division or to organize along product or geographic lines. A company with distinct product lines may create an international department in each product division. A company with products that have common end users may organize geographically; for example, it may form a division for Europe, another for the Far East, and so on. A small company's initial needs may be satisfied by a single export manager who has responsibility for the full range of international activities. Regardless of how a company organizes for exporting, it should ensure that the organization facilitates the marketer's job. Good marketing skills can help the firm overcome the handicap of operating in an unfamiliar market. Experience has shown that a company's success in foreign markets depends less on the unique attributes of its products than on its marketing methods. Once a company has been organized to handle exporting, the proper channel of distribution needs to be selected in each market. These channels include sales representatives, agents, distributors, retailers, and end users. Sales RepresentativesOverseas, a sales representative is the equivalent of a manufacturer's representative in the United States. The representative uses the company's product literature and samples to present the product to potential buyers. A representative usually handles many complementary lines that do not compete. The sales representative usually works on a commission basis, assumes no risk or responsibility, and is under contract for a definite period of time (renewable by mutual agreement). The contract defines territory, terms of sale, method of compensation, reasons and procedures for terminating the agreement, and other details. The sales representative may operate on either an exclusive or a nonexclusive basis. AgentsThe widely misunderstood term agent means a representative who normally has authority, perhaps even power of attorney, to make commitments on behalf of the firm he or she represents. Firms in the United States and other developed countries have stopped using the term and instead rely on the term representative, since agent can imply more than intended. Any contract should state whether the representative or agent does or does not have legal authority to obligate the firm. DistributorsThe foreign distributor is a merchant who purchases merchandise from a U.S. exporter (often at substantial discount) and resells it at a profit. The foreign distributor generally provides support and service for the product, relieving the U.S. company of these responsibilities. The distributor usually carries an inventory of products and a sufficient supply of spare parts and maintains adequate facilities and personnel for normal servicing operations. The distributor typically carries a range of noncompetitive but complementary products. End users do not usually buy from a distributor; they buy from retailers or dealers. The payment terms and length of association between the U.S. company and the foreign distributor are established by contract. Some U.S. companies prefer to begin with a relatively short trial period and then extend the contract if the relationship proves satisfactory to both parties. Foreign RetailersA company may also sell directly to a foreign retailer, although in such transactions, products are generally limited to consumer lines. The growth of major retail chains in markets such as Canada and Japan has created new opportunities for this type of direct sale. The method relies mainly on traveling sales representatives who directly contact foreign retailers, although results may be accomplished by mailing catalogs, brochures, or other literature. The direct mail approach has the benefits of eliminating commissions, reducing traveling expenses, and reaching a broader audience. For best results, however, a firm that uses direct mail to reach foreign retailers should support it with other marketing activities. American manufacturers with ties to major domestic retailers may also be able to use them to sell abroad. Many large American retailers maintain overseas buying offices and use these offices to sell abroad when practicable. Direct Sales to End UsersA U.S. business may sell its products or services directly to end users in foreign countries. These buyers can be foreign governments; institutions such as hospitals, banks, and schools; or businesses. Buyers can be identified at trade shows, through international publications, or through U.S. government contact programs, such as the Department of Commerce's Export Contact List Service (ECLS). Chapter 7, , details these and other buyer contact activities and programs. The U.S. company should be aware that if a product is sold in such a direct fashion, the exporter is responsible for shipping, payment collection, and product servicing unless other arrangements are made. Unless the cost of providing these services is built into the export price, a company could end up making far less than originally intended. Locating Foreign Representatives and BuyersA company that chooses to use foreign representatives may meet them during overseas business trips or at domestic or international trade shows. There are other effective methods, too, that can be employed without leaving the United States. Ultimately, the exporter may need to travel abroad to identify, evaluate, and sign overseas representatives; however, a company can save time by first doing homework in the United States. Methods include use of US&FCS contact programs, banks and service organizations, and publications. For more information on these methods, refer to Chapter 7,. Contacting and Evaluating Foreign RepresentativesOnce the U.S. company has identified a number of potential representatives or distributors in the selected market, it should write directly to each. Just as the U.S. firm is seeking information on the foreign representative, the representative is interested in corporate and product information on the U.S. firm. The prospective representative may want more information than the company normally provides to a casual buyer. Therefore, the firm should provide full information on its history, resources, personnel, the product line, previous export activity, and all other pertinent matters. The firm may wish to include a photograph or two of plant facilities and products or possibly product samples, when practical. (Whenever the danger of piracy is significant, the exporter should guard against sending product samples that could be easily copied.) For more information on correspondence with foreign firms refer to Chapter 9,. A U.S. firm should investigate potential representatives of distributors carefully before entering into an agreement. See table 4-1 for an extensive checklist of factors to consider in such evaluations. In brief, the U.S. firm needs to know the following points about the representative or distributor's firm:
A U.S. company may obtain much of this information from business associates who currently work with foreign representatives. However, U.S. exporters should not hesitate to ask potential representatives or distributors detailed and specific questions; exporters have the right to explore the qualifications of those who propose to represent them overseas. Well-qualified representatives will gladly answer questions that help distinguish them from less-qualified competitors. In addition, the U.S. company may wish to obtain at least two supporting business and credit reports to ensure that the distributor or representative is reputable. By using a second credit report from another source, the U.S. firm may gain new or more complete information. Reports are available from commercial firms and from the Department of Commerce's World Traders Data Report (WTDR) program. The WTDR service provides background reports on specific foreign firms prepared by the US&FCS posts overseas. In addition to information on size, product lines, and financial stability, each WTDR also contains a general narrative statement by the commercial officer who conducted the investigation. Commercial firms and banks are also sources of credit information on overseas representatives. They can provide information directly or from their correspondent banks or branches overseas. Directories of international companies may also provide credit information on foreign firms. If the U.S. company has the necessary information, it may wish to contact a few of the foreign firm's U.S. clients to obtain an evaluation of their representative's character, reliability, efficiency, and past performance. To protect itself against possible conflicts of interest, it is also important for the U.S. firm to learn about other product lines that the foreign firm represents. Once the company has qualified some foreign representatives, it may wish to travel to the foreign country to observe the size, condition, and location of offices and warehouses. In addition, the U.S. company should meet the sales force and try to assess its strength in the marketplace. If traveling to each distributor or representative is difficult, the company may decide to meet with them at U.S. and worldwide trade shows. Negotiating an Agreement with a Foreign RepresentativeWhen the U.S. company has found a prospective representative that meets its requirements, the next step is to negotiate a foreign sales agreement. Department of Commerce district offices and Export Assistance Centers can provide counseling to firms planning to negotiate foreign sales agreements with representatives and distributors. The potential representative is interested in the company's pricing structure and profit potential. Representatives are also concerned with the terms of payment, product regulation, competitors and their market shares, the amount of support provided by the U.S. firm (sales aids, promotional material, advertising, etc.), training for sales and service staff, and the company's ability to deliver on schedule. The agreement may contain provisions that the foreign representative
To ensure a conscientious sales effort from the foreign representative, the agreement should include a requirement that the foreign representative apply the utmost skill and ability to the sale of the product for the compensation named in the contract. It may be appropriate to include performance requirements such as a minimum sales volume and an expected rate of increase. In the drafting of the agreement, special attention must be paid to safeguarding the exporter's interests in cases in which the representative proves less than satisfactory. ( Refer to Chapter 11, , for recommendations on specifying terms of law and arbitration.) It is vital to include an escape clause in the agreement, allowing the exporter to end the relationship safely and cleanly if the representative does not work out. Some contracts specify that either party may terminate the agreement with written notice 30, 60, or 90 days in advance. The contract may also spell out exactly what constitutes just cause for ending the agreement (e.g., failure to meet specified performance levels). Other contracts specify a certain term for the agreement (usually one year) but arrange for automatic annual renewal unless either party gives notice in writing of its intention not to renew. In all cases, escape clauses and other provisions to safeguard the exporter may be limited by the laws of the country in which the representative is located. For this reason, the U.S. firm should learn as much as it can about the legal requirements of the representative's country and obtain qualified legal counsel in preparing the contract. These are some of the legal questions to consider:
The exporter should also be aware of U.S. laws that govern such contracts. For instance, the U.S. company should seek to avoid provisions that could be contrary to U.S. antitrust laws. The Export Trading Company Act provides a means to obtain antitrust protection when two or more companies combine for exporting. In any case, the U.S. firm should obtain legal advice when preparing and entering into any foreign agreement. Table 4-1. Factors to Consider When Choosing a Foreign Rep or Distributor The following checklist should be tailored by each company to its own needs. Key factors vary significantly with the products and countries involved. Size of sales force
Sales record
Territorial analysis
Product mix
Facilities and equipment
Marketing policies
Customer profile
Principals represented
Promotional thrust
Chapter 5Preparing Products for ExportSelecting and preparing a product for export requires not only product knowledge but also knowledge of the unique characteristics of each market being targeted. The market research conducted (as outlined in Chapter 3) and the contacts made with foreign representatives (as outlined in Chapter 4) should give the U.S. company an idea of what products can be sold where. Before the sale can occur, however, the company may need to modify a particular product to satisfy buyer tastes or needs in foreign markets. The extent to which the company will modify products sold in export markets is a key policy issue to be addressed by management. Some exporters believe the domestic product can be exported without significant changes. Others seek to consciously develop uniform products that are acceptable in all export markets. If the company manufactures more than one product or offers many models of a single product, it should start with the one best suited to the targeted market. Ideally, the firm chooses one or two products that fit the market without major design or engineering modifications. Doing so is possible when the U.S. company
Product Preparation Considerations
Product AdaptationTo enter a foreign market successfully, a U.S. company may have to modify its product to conform to government regulations, geographic and climatic conditions, buyer preferences, or standard of living. The company may also need to modify its product to facilitate shipment or to compensate for possible differences in engineering or design standards. Foreign government product regulations are common in international trade and are expected to expand in the future. These regulations can take the form of high tariffs or of nontariff barriers, such as regulations or product specifications. Governments impose these regulations to
Detailed information on regulations imposed by foreign countries is available from the country desk officers of the Department of Commerce's IEP unit. Where particularly onerous or discriminatory barriers are imposed by a foreign government, a U.S. company may be able to get help from the U.S. government to press for their removal. The firm should contact the nearest U.S. Export Assistance Center, Commerce Department district office or the Office of the U.S. Trade Representative in Washington, D.C. For further information, refer to Appendix II, , and Appendix III,. It is often necessary for a company to adapt its product to account for geographic and climatic conditions as well as for availability of resources. Factors such as topography, humidity, and energy costs can affect the performance of a product or even define its use. The cost of petroleum products along with a country's infrastructure, for example, may indicate the demand for a company's energy-consuming products. Buyer preferences in a foreign market may also lead a U.S. manufacturer to modify its product. Local customs, such as religion or the use of leisure time, often determine whether a product will sell. The sensory impact of a product, such as taste or visual impact, may also be a critical factor. The Japanese desire for beautiful packaging, for example, has led many U.S. companies to redesign cartons and packages specifically for this market. A country's standard of living can also determine whether a company needs to modify a product. The level of income, the level of education, and the availability of energy are all factors that help predict the acceptance of a product in a foreign market. If a country's standard of living is lower than that of the United States, a manufacturer may find a market for less sophisticated product models that have become obsolete in the United States. Certain high-technology products are inappropriate in some countries not only because of their cost, but also because of their function. For example, a computerized industrial washing machine might replace workers in a country where employment is a high priority. In addition, these products may need a level of servicing that is unavailable in some countries. Market potential must be large enough to justify the direct and indirect costs involved in product adaptation. The firm should assess the costs to be incurred and the increased revenues expected from adaptation (they may be difficult to determine). The decision to adapt a product is based in part on the degree of commitment to the specific foreign market; two firms, one with short-term goals and the other with long-term goals, may have different perspectives. Engineering and RedesignIn addition to adaptations related to cultural and consumer preference, the exporter should be aware that even fundamental aspects of its products may require changing. For example, electrical standards in many foreign countries differ from U.S. electrical standards. It is not unusual to find phases, cycles, or voltages (both in home and commercial use) that would damage or impair the operating efficiency of equipment designed for use in the United States. These electrical standards sometimes vary even in the same country. Knowing this requirement, the manufacturer can determine whether a special motor must be substituted or arrange for a different drive ratio to achieve the desired operating revolutions per minute. Similarly, many kinds of equipment must be engineered in the metric system for integration with other pieces of equipment or for compliance with the standards of a given country. The United States is virtually alone in its adherence to a nonmetric system, and U.S. firms that compete successfully in the global market have found metric measurement to be an important detail in selling to overseas customers. Even instruction or maintenance manuals should take care to give dimensions in centimeters, weights in grams or kilos, and temperatures in degrees Celsius. Information on foreign standards and certification systems is available from
National Center for Standards and Certification Information (NCSCI)
NIST Office of Information Services Since freight charges are usually assessed by weight or volume (whichever provides the greater revenue for the carrier), a company should give some consideration to shipping an item unassembled to reduce delivery costs. Shipping unassembled also facilitates movement on narrow roads or through doorways and elevators. Branding, Labeling, and PackagingConsumers are concerned with both the product itself and the product's supplementary features, such as packaging, warranties, and service. Branding and labeling of products in foreign markets raise new considerations for the U.S. company:
A company may find that building international recognition for a brand is expensive. Protection for brand names varies from one country to another, and in some developing countries, barriers to the use of foreign brands or trademarks may exist. In other countries, piracy of a company's brand names and counterfeiting of its products are widespread. To protect its products and brand names, a company must comply with local laws on patents, copyrights, and trademarks. A U.S. firm may find it useful to obtain the advice of local lawyers and consultants where appropriate. InstallationAnother element of product preparation that a company should consider is the ease of installing that product overseas. If technicians or engineers are needed overseas to assist in installation, the company should minimize their time in the field if possible. To do so, the company may wish to preassemble or pretest the product before shipping. Disassembling the product for shipment and reassembling abroad may be considered by the company. This method can save the firm shipping costs, but it may add to delay in payment if the sale is contingent on an assembled product. Even if trained personnel do not have to be sent, the company should be careful to provide all product information, such as training manuals, installation instructions, and parts lists, in the local language. WarrantiesThe company should include a warranty on the product, since the buyer expects a specific level of performance and a guarantee that it will be achieved. Levels of expectation for a warranty vary from country to country depending on its level of development, competitive practices, the activism of consumer groups, local standards of production quality, and other similar factors. A company may use warranties for advertising purposes to distinguish its product from its competition. Strong warranties may be required to break into a new market, especially if the company is an unknown supplier. In some cases, warranties may be instrumental in making the sale and may be a major element of negotiation. In other cases, however, warranties similar to those in the United States are not expected. By providing an unnecessary warranty, the company may raise the cost of the product higher than the competitors' costs. When considering this point, exporters should keep in mind that servicing warranties will probably be more expensive and troublesome in foreign markets. It is desirable to arrange warranty service locally with the assistance of a representative or distributor. ServicingOf special concern to foreign consumers is the service the U.S. company provides for its product. Service after the sale is critical for some products; generally, the more complex the product technology, the greater the demand for presale and postsale service. There is, therefore, pressure in some firms to offer simpler, more robust products overseas to reduce the need for maintenance and repairs. U.S. exporters who rely on a foreign distributor or agent to provide service backup must take steps to ensure an adequate level of service. These steps include training, periodically checking service quality, and monitoring inventories of spare parts. Refer to Chapter 15, , for more on after-sales service. Chapter 6Service ExportsThe United States is the world's premier producer and exporter of services. Encompassing all economic activity other than agriculture, mining, and manufacturing, the service sector is the largest component of the U.S. economy, accounting for 76 percent of private sector output and 80 percent of private non-farm employment (over 78 million jobs in 1995). U.S. services exports more than doubled over the last seven years--increasing $100 billion since 1987, and $51 billion just since 1990. In 1994, U.S. services exports exceeded imports by $60 billion (offsetting 36 percent of the deficit on merchandise trade). Major markets for U.S. exports include the European Union ($55 billion in 1994 exports), Japan ($30 billion), and Canada ($17 billion). At $9 billion, Mexico is currently the largest of the emerging markets for services exports. These services exports support millions of U.S. jobs--approximately 3.4 million in 1992--and play a key role in U.S. economic growth. The income generated and the jobs created through the sale of services abroad are just as important to the U.S. economy as income and jobs resulting from the production and export of goods. In view of the shift toward services both domestically and internationally and the substantial competitive advantage of the United States in the services field, those who have services to offer can become major participants in world trade. The Trade Promotion Coordinating Committee (TPCC) Services Working Group was established in 1992 because of the importance of services trade. The TPCC/Services Working Group is responsible for coordinating and streamlining Federal Government trade promotion activities, planning and implementing service industries trade promotion activities, and promoting American service industries in new or neglected markets. The Service Industries and Finance sector of Trade Development in the U.S. Department of Commerce is responsible for the TPCC Services Working Group. For further information contact SWG at Tel: (202) 482-5086. Typical Service ExportsThe service sector accounts for a great share of the U.S. economy, although some services are not easily exported. It would be very difficult to export most personal services, such as the service performed by waiters in restaurants; but most business services can be exported--especially those highly innovative, specialized, or technologically advanced services that are efficiently performed in the United States. See for some general statistics on U.S. service exports. The following sectors have particularly high export potential:
Exporting Services versus ProductsThere are many obvious differences between services and products. Consequently, important features differentiate exporting services from exporting products:
Demand for certain services can derive from product exports. Many of our merchandise exports would not take place if they were not supported by service activities such as banking, insurance, and transportation. Services can be crucial in stimulating product export and are a critical factor in maintaining such exports. However, in such cases, services follow products rather than taking the lead over them. Marketing Services AbroadSince service exports are often delivered in the support of product exports, a sensible approach for some beginning exporters is to follow the path of relevant product exports. For years, many large accounting and banking firms have exported by following their major multinational clients abroad and continuing to assist them in their international activities. Smaller service exporters who cooperate closely with manufacturing firms can also determine where these manufacturing firms are operating internationally and aim to provide service support for these manufacturers abroad. For service providers whose activities are independent from products, a different strategy is needed. These individuals and firms should search for market situations abroad that are similar to the domestic market. Many opportunities derive from understanding the process and stage of development of relevant trade activities abroad. Just as U.S. society has undergone change, foreign societies are subject to changing economic trends. If, for example, new transportation services are opened up in a country, an expert in the area of containerization may offer services to improve the efficiency of the new system. Leads for service activities can also be gathered by staying informed about international projects sponsored by organizations such as the World Bank, the Caribbean Development Bank, the Inter-American Development Bank, the UN, and the World Health Organization. Very frequently, such projects are in need of service support. Government Support for Service ExportsIn recognition of the increasing importance of service exports, the U.S. Department of Commerce has made the Office of Service Industries (OSI) responsible for analyzing and promoting services trade. The OSI provides information on opportunities and operations of services abroad. For more information about specific industry sectors, contact the OSI at Tel: (202) 482-3575; Fax: (202) 482-2669; Web site: www.ita.doc.gov/sif/. The Department of Commerce provides the same overseas exposure in Commercial News USA magazine for U.S. service firms as for manufacturers. A brief description of the service with the firm's name and address is listed under the appropriate category. Interested overseas parties are instructed to contact listed firms directly. A modest fee is charged for this service, which distributes the listed information to more than 135,000 agents, distributors, and government officials in 152 countries. An additional two million have electronic access to the information. For more information, see , or contact your nearest Export Assistance Center or Department of Commerce district offices or call Tel: (202) 482-3334. Both the Agency for International Development and the Trade and Development Agency offer opportunities for U.S. service firms. For a more complete description of their activities, see and. The Engineering Multiplier program of the Ex-Im Bank assists U.S. design, engineering, and architectural firms with foreign contracts. For information on this program, contact the Ex-Im Bank's Engineering and Environment Division at Tel: (202) 565-3570; Fax: (202) 565-3584. Recent Trade Agreements Liberalizing Services TradeThe General Agreement on Trade in Services (GATS), a result of the Uruguay Round of Multilateral Trade Negotiations, liberalizes trade in services amongst WTO member nations. This is the first multilateral, legally enforcable agreement covering trade and investment in the service industries. Some of its key features include most favored nation (MFN) treatment, national treatment, improved market access, transparency requirements and free flow of payments and transfers. Some of the U.S. industries expected to benefit the most from the GATS include advertising; foreign travel-related businesses; and U.S. professional services, including accounting, architecture, and engineering. In addition, the Government Procurement Agreement opens market access for service providers. The North American Free Trade Agreement (NAFTA) also provides a number of opportunities to U.S. businesses through improved market access and other liberalizations. Some of the industries most affected by NAFTA are:
Top 10 Service ExportsThe values reported here exclude the value of affiliated (intra-firm) sales except for categories marked with an asterisk. By definition, the services exports data also exclude the value of sales by foreign affiliates, which are often a very important channel for U.S. firms marketing their services abroad. This information was prepared by the International Trade Administration's Office of Service Industries based on Bureau of Economic Analysis estimates that are reported annually in Survey of Current Business. For further information, contact the Office of Service Industries at (202) 482-3575. Millions of Dollars
Travel* $60,406
Transportation* $43,555
Includes:
Commercial, Professional, and
Includes:
Financial Services $8,602
Includes: Education and Training Services $7,510
Includes:
Millions of Dollars
Entertainment Services $3,969
Includes:
Equipment Installation, Maintenance,
Information Services $3,369
Includes:
Telecommunications Services $2,757
Health Care Services $812
Includes:
Other Services*
U.S. Private Services Exports
Chapter 7Making ContactsAfter a company has identified its most promising markets and devised strategies to enter those markets, the next step is to actually locate a buyer. If that buyer is the end user of a company's product or service, a relatively simple transaction may result. In many cases, however, U.S. exporters need an in-country presence through a representative or distributor to reach the eventual buyer. Alternatively, the firm may identify customers through attendance at trade shows, trade missions, direct mail campaigns, and advertising. Regardless of how the exporter makes contacts and develops sales leads, the exporter faces many questions:
In this chapter U.S. exporters will find the means to answer these questions. The marketing techniques described are by no means exhaustive. However, the chapter describes sources of assistance in locating buyers, evaluating trade missions and shows, and conducting other programs designed to make contacts. Department of Commerce Contact ProgramsThe U.S. Department of Commerce can help exporters identify and qualify direct leads for potential buyers, distributors, joint venture partners, and licensees from both private and public sources. Along with its various product, country, and program experts, the Department of Commerce has an extensive network of commercial officers posted in countries that represent 95 percent of the market for U.S. products. Services and publications available through the Department of Commerce are listed in this section. Exporters should contact the nearest Export Assistance Center or Commerce district office for more information or contact
Office of Export Information and Research Services International Contact InformationCommercial Service International Contacts (CSIC) provides contact and product information on more than 70,000 firms abroad interested in U.S. products. Country Directories of International Contacts (CDIC) provide the name and contact information for directories of importers, agents, trade associations, government agencies, etc., on a country-by-country basis. Both are available on the NTDB. Trade Opportunity Program (TOP)This service provides timely sales leads from overseas firms seeking to buy or represent U.S. products and services. Commercial specialists in U.S. embassies and consulates around the world collect TOP leads at trade shows, through conversations with local buyers, and through market research. They may include direct sales leads, representation offers, investment opportunities, licensing partners, joint venture partnerships, project bids, and foreign government tenders. These prescreened leads are transmitted to the United States every work day by commercial specialists in U.S. embassies and consulates abroad and then immediately posted on Commerce's Economic Bulletin Board (EBB). U.S. exporters respond directly to the contacts listed for the leads of interest. Users can retrieve the TOP files (and all other files) from the EBB each day through a personal computer and modem. Subscribers may use, edit, or redistribute the leads in any way they wish. For more information on subscribing to the EBB, see . TOP leads are also available through commercial newspapers including the Journal of Commerce , major on-line electronic database services, industry and trade publications, trade associations, state economic development agencies, and World Trade Centers. The NTDB lists the TOP leads for the past two years. Agent/Distributor Service (ADS)The ADS is used to locate foreign import agents and distributors.Commercial specialists at U.S. embassies and consulates abroad search the market for qualified agents, distributors, or representatives, according to specifications. Prospects are screened for capability and interest, and within 30 to 60 days information is delivered on up to six of the best qualified candidates. For each prospect, the U.S. company is given the company name, name and title of key contact person, telephone and fax numbers, level of interest in distributing your product or service, preferred language for correspondence, prospect's opinion on the marketability of your product or service in the targeted market, U.S. Department of Commerce commercial specialist's assessment of each prospect's capability and suitability to distribute your products. ADS application forms may be obtained from Export Assistance Centers or Commerce district offices. Trade specialists at these offices can help with preparing applications and can provide guidance if there are any factors barring the desired relationship. Gold Key ServiceThrough the Gold Key Service, experienced trade professionals in your target country will arrange appointments in overseas markets with prescreened contacts., including representatives, distributors, government contacts, licensing and joint venture partners. Gold Key Service includes customized market and industry briefings prior to your business meetings, plus a debriefing with trade professionals afterwards to discuss the results of your meetings and appropriate follow-up strategies. It can also include hiring interpreters, help with travel and accommodations, providing clerical support, screening business candidates, and setting appointments. The Gold Key Service is now available in more than 70 markets worldwide, at fees ranging from $150 to $600. To find out more, contact the Export Assistance Center or Commerce district office nearest you. International Company ProfilesInternational Company Profiles (ICPs) are thorough background checks on potential clients. Commercial specialists in U.S. embassies and consulates abroad will conduct investigations and deliver the results in 30 to 45 days, at a very reasonable cost. Reports include information such as bank and trade references; principals, key officers and managers; product lines; number of employees; financial data; sales volume; reputation; and market outlook. An ICP may also include reports on subsidiary/parent relationships, recent news items about the firm, the firms' U.S. customers, operational problems, activities of prominent owners, and branch locations. Requests are held in strict confidence--the subject firm does not know who ordered the report. ICPs are relatively inexpensive, may provide information not available from other investigative services, and will qualify as one of the reports required for foreign credit insurance coverage. Note that these profiles may not be available in countries with well developed commercial credit reporting agencies. Contact the Export Assistance Center or Commerce district office nearest you for more information on ICPs. Commercial News USA (CNUSA)CNUSA provides worldwide exposure for U.S. products and services through an illustrated catalog-magazine and electronic bulletin boards. The catalog-magazine is distributed through U.S. embassies and consulates to business readers in 152 countries. Copies are also made available to international visitors at trade events around the world. Current hard-copy distribution averages 137,000 copies, with 10 issues per year. Information in CNUSA is further disseminated by US&FCS posts or local organizations that reprint all or part of the publication. CNUSA 's electronic distribution reaches an additional two million business readers. Listings in CNUSA describe the major features of an export product or service. The name, address, and telephone and fax numbers of the U.S. manufacturer or distributor are included along with a photo or illustration. Several size formats are available, and prices start at $395; larger formats may contain longer descriptions. The electronic versions of CNUSA transmit the complete text of the magazine listings, without illustrations, to EBB subscribers. The CNUSA program covers more than 30 industry categories and focuses on products that have been on the U.S. market no longer than three years. Companies may also market services and trade and technical literature through CNUSA . Only pharmaceuticals, raw materials, agricultural commodities, and items on the Federal Register Munitions List are excluded from CNUSA . All products in CNUSA must be at least 51 percent U.S. parts and 51 percent U.S. labor. CNUSA also profiles up to three industries per issue with high export potential. In these special industry sections, U.S. firms may promote established products as well as new models. Participants may purchase up to three separate listings per issue, each focusing on a single product model. A new product may be listed four times per year. CNUSA does not feature descriptions of entire product lines or accept camera-ready advertisements. The trade leads generated by CNUSA help U.S. firms identify potential export markets and make contacts leading to representation, distributorships, joint venture or licensing agreements, or direct sales. Overseas inquiries come directly to participating U.S. firms and are address coded to allow for tracking and program evaluation. Interested firms should contact the nearest Export Assistance Center or Commerce district office for information, or call the product manager at (202) 482-3334. Department of Commerce Trade Event ProgramsSome products, because of their very nature, are difficult to sell unless the potential buyer has an opportunity to examine them in person. Sales letters and printed literature can be helpful, but they are certainly no substitute for an actual presentation of products in the export market. One way for a company to actually present its products to an overseas market is by participating in trade events such as trade shows, fairs, trade missions, matchmaker delegations, and catalog exhibitions. In today's international market, trade fairs are "shop windows" where thousands of firms from many countries display their wares. They are marketplaces where buyer and seller can meet with mutual convenience. Some fairs, especially in Europe, have a history that goes back centuries. Attending trade fairs involves a great deal of planning. The potential exhibitor must take into account the following logistic considerations:
There are many excellent international trade fairs, both privately run and government sponsored. A trade magazine or association can generally provide information on major shows. Because of the many considerations facing exhibitors, a company may wish to attend a Department of Commerce-organized U.S. pavilion overseas. For additional guidance, contact the local Commerce Department office or US&FCS International Operations regional director. Certified Trade Fair ProgramThe Department of Commerce Certified Trade Fair Program is designed to encourage private organizations to recruit new-to-market and new-to-export U.S. firms to exhibit in trade fairs overseas. To receive certification, the organization must demonstrate that (1) the fair is a leading international trade event for an industry and (2) the fair organizer is capable of recruiting U.S. exhibitors and assisting them with freight forwarding, customs clearance, exhibit design and setup, public relations, and overall show promotion. The fair organizer must agree to assist new-to-export exhibitors as well as small businesses interested in exporting. In addition to the services the organizer provides, U.S. exhibitors have the facilities and services of the Department of Commerce available to them, including:
For additional information contact a local Commerce Department office or
U.S. and Foreign Commercial Service International Buyer ProgramThe Department of Commerce encourages foreign buyers to attend selected U.S. trade shows. US&FCS selects more than 20 leading U.S. trade shows with high export potential. U.S. firms are assisted in fulfilling their international business objectives through their participation in selected U.S. trade shows where they can meet foreign buyers, distributors, potential licensees or joint venture partners. Each show selected for the International Buyer Program receives special promotion through overseas mailings, U.S. embassy and regional commercial newsletters, CNUSA, Business America, foreign trade association and chambers of commerce journals, and trade journals overseas. Qualified buyers and prospective representatives and distributors are recruited from all over the world to travel to the show and see U.S. products firsthand. US&FCS works with U.S. companies exhibiting at these shows by helping U.S. firms match their products, marketing objectives, and geographic targets with the needs of the international business visitors. Through the local Commerce Department offices, international trade specialists are ready to take exhibiting U.S. firms through the exporting process and provide counseling to them before the trade show. In addition, an international trade specialist is available at each show to provide on-the-spot export counseling. The International Buyer Program is also an excellent means for experienced exporters to penetrate new markets. U.S. exhibitors at selected International Buyer Program shows benefit from complimentary services such as worldwide promotion of products and services through the Export Interest Directory , published by the show organizer and distributed to all international visitors at the event, as well as to our commercial offices abroad; export counseling and services to help meet prospective international distributors, representatives, and buyers at the International Business Center; access to hundreds, sometimes thousands, of current international trade leads i; use of the on-site international lounge, business meeting facilities, and interpreter services. For additional information contact the nearest Export Assistance Center or Commerce district office or call the International Buyer Program at Tel: (202) 482-0481. Matchmaker Trade DelegationsMatchmaker trade delegations, organized and led by Commerce personnel, enable new-to-export and new-to-market firms to meet prescreened prospects who are interested in their products or services in overseas markets. Matchmaker delegations usually target major markets in two or three countries and limit trips to a week or less. Commercial specialists at U.S. embassies and consulates in the targeted countries prescreen contacts and arrange business appointments. In this way, U.S. firms can interview a maximum number of prospective business partners with a minimum of time away from the office. Participants also take advantage of group-rate hotels and airfare as well as on-the-spot U.S. embassy support. Thorough briefings on market requirements and business practices and interpreters' services are also provided. Delegation members pay their own expenses and a share of the operating costs of the event. For a list of upcoming Matchmaker Trade Delegations, contact the Export Assistance Center or Commerce district office nearest you, or contact the product manager at Tel: (202) 482-3119; Fax: (202) 482-0178; Web site: www.ita.doc.gov/uscs/uscsmatc.html. Multi-State/Catalog ExhibitionsU.S. firms may test foreign markets, develop sales leads, and locate agents or distributors through multi-state/catalog exhibitions sponsored by the US&FCS, in some instances in conjunction with the Department of State's foreign service posts. These exhibitions are done in cooperation with state development offices and feature displays of a large number of U.S. product catalogs, sales brochures, and other graphic sales aids at four to six U.S. embassies and consulates or in conjunction with trade shows in a region. Because it requires the exporter to make a much smaller investment than a trade mission or other personal visits, this program is particularly well suited for use in developing markets or for smaller companies. To participate, a company must describe its marketing objectives in each targeted country, send catalogs to the exhibition sites abroad, respond promptly to each trade inquiry, and pay a small participation fee. The U.S. Department of Commerce and state representatives will plan, host, and promote exhibitions in the targeted markets abroad; showcase catalogs to local business visitors; personally represent the company at each event, with commercial specialists fluent in the local language to answer questions about the products and services; and send the company contact information for the local companies that expressed an interest in your products and services. For a list of upcoming events or for more information on the program, contact the nearest Export Assistance Center, local Commerce district office, or
Multi-State/Catalog Exhibition Program Other Department of Commerce ProgramsTrade Offices and Commercial OfficesThere are several Trade Centers and Commercial Centers overseas which are separate from the Embassies and Consulates. Located in Tokyo, Jakarta, Shanghai, Mexico City, and Sao Paulo, these centers may organize and coordinate a range of export promotion programs, including on-site trade shows, U.S. pavilions in international trade fairs, solo U.S. exhibitions, trade seminars, trade missions, catalog exhibitions, video and catalog exhibitions, and special promotions. Each center performs these functions only in the country in which it is located. When not being used to stage trade exhibitions, centers with exhibit and conference facilities frequently are made available to individual firms or associations. Facilities can be used for sales promotions, seminars, and sales meetings. For a nominal fee, these centers and some commercial offices overseas also provide use of limited office space for traveling U.S. business representatives as well as local telephone use, a market briefing, use of audiovisual equipment, and assistance in making appointments. Major Projects ProgramThis program helps U.S. firms win contracts for planning, engineering, and constructing large foreign infrastructure and industrial systems projects, including equipment and turnkey installations. Assistance is provided when requested by a U.S. embassy, a prospective foreign client, or a U.S. firm, either to encourage U.S. companies to bid on a particular project or to help them pursue overseas contracts. Speed and flexibility in developing a strategy for each case are essential elements in the assistance given U.S. firms. As circumstances warrant, the Infrastructure Division mobilizes and coordinates appropriate support from other U.S. government agencies, including foreign service posts abroad. For further information, contact
Infrastructure Division, Trade Development Textile and Apparel Export Expansion ProgramIn recognition of the increasing importance of textile and apparel exports, Commerce has created this program to encourage and assist U.S. manufacturers in initiating or expanding export sales, and to improve foreign market access for these products. To achieve these goals, the program does the following:
The program is administered by:
Market Expansion Division Department of Agriculture Foreign Agricultural ServiceThrough a network of counselors, attaches, trade officers, commodity analysts, and marketing specialists, USDA's FAS can help arrange contacts overseas and provide promotional assistance. The programs and services offered are described in this section. Trade Assistance and Promotion Office (TAPO)The Trade Assistance and Promotion Office of the Foreign Agricultural Service (FAS) serves as the first point of contact for persons who need information on foreign markets for agricultural products. The TAPO staff can provide basic export counseling and direct you to the appropriate USDA offices to answer your specific technical questions on exporting. In addition, the staff can provide country- and commodity-specific Foreign Market Information Reports , which focus on best market prospects and contain contact information on distributors and importers. Extensive information on the Foreign Agricultural Service is also available through the FAS Home Page on Internet.
Trade Assistance and Promotion Office Commodity and Marketing ProgramsThe Commodity and Marketing area of FAS handles inquiries for specific commodity-related information. Each division provides support for analysis of consumption, trade, stocks, and so on, and marketing information. The eight divisions and their telephone numbers are as follows.
Agricultural Export Services Division (AgExport)
Dairy, Livestock, and Poultry Division
Forest and Fishery Products Division
Grain and Feed Division
Horticultural and Tropical Products Division
Production Estimates and Crop Assement Division
Cotton, Oilseeds, Tobacco and Seeds Division Agricultural Export Services Division (AgExport)AgExport's purpose is to expand overseas markets for U.S. agricultural and food commodities and products through a wide range of services, which are described in this section. AgExport ConnectionsAgExport Connections provides information services to help expand and promote agricultural exports. It offers the AgExport Action Kit, which contains information on USDA programs and services that are designed to promote exports of U.S. food, natural fiber and forest products. Among the services described in the Kit are: Trade Leads, Buyer Alert, Foreign Buyer Lists, and U.S. Supplier Lists. Details of these services are given below. U.S. exporters may request a free copy of the AgExport Action Kit by contacting
AgExport Connections Trade Leads. These inquiries from overseas buyers in 130 countries looking for U.S. products are sent daily to USDA. Several thousand trade leads are disseminated domestically each year. Trade leads are made available to U.S. exporters on a daily basis through the FAS Internet home page and the Department of Commerce's Electronic Bulletin Board. Trade Leads are also available through a Trade Leads Fax Polling System, various trade publications, and the state departments of agriculture and trade development centers. Some of the easiest ways are listed below: 1. Trade Leads Fax Service. Exporters can receive categorized trade leads by polling the AgExport fax machines each week. The faxed information is free, but the company seeking the information must pay the cost of the call. Interested companies may obtain an information sheet and directions on how to poll the Trade Leads Fax Service units by contacting AgExport Connections Tel: (202) 720-6343; Fax (202) 690-4374.
2. Electronic trade leads. With a computer, a modem, and communications software, exporters can receive trade leads electronically, either through the Department of Commerce's Economic Bulletin Board (EBB) or through the FAS Web site on the Internet (http://www.fas.usda.gov). 3. Journal of Commerce. Selected trade leads received by USDA are published several times each week in the "Agricultural Trade Leads" columns of the Journal of Commerce . For subscription information call Tel: (800) 221-3777. Buyer Alert. This biweekly newsletter and inexpensive advertising service for exporters can help introduce U.S. food and agricultural products to foreign buyers. Buyer Alert reaches more than 15,000 buyers in 60 countries. Only agricultural products (no equipment or services) may be announced in Buyer Alert. Each announcement features a product description, an optional indicator price, and specific firm information. To take advantage of the service, contact AgExport Connections, Ag Box 1052, AGX/FAS/USDA, Washington, DC 20250-1052; Tel: (202) 720-7103; Fax: (202) 690-4374. Foreign Buyer Lists. The AgExport Connection staff maintains a data base of more than 20,000 foreign firms in 80 countries. These foreign firms have expressed interest in importing specific U.S. food and agricultural products. U.S. firms may obtain these lists to match their products with prospective foreign buyers. The Foreign Buyer Lists provide company name; contact name; address; and telephone, fax, and type of product(s) imported. The lists may be ordered for a specific commodity for the entire world or by country for all commodities. These lists are available for distribution only in the United States. U.S. Supplier Lists. This service offers information on approximately 5,000 U.S. exporters of food and agricultural products. Many of these firms will also supply U.S. brokers or agents. U.S. Supplier Lists are available for more than 500 specific product categories. They provide important information on each firm such as contact person, address, telephone, fax, year started, number of employees, and annual sales.Lists may be ordered by product categories. Trade ShowsThe FAS also organizes U.S. pavilions at major international trade shows and exhibitions. These events provide a cost-effective way of testing a market, checking the competition, meeting foreign buyers and consumers, and establishing new contacts. The Trade Show Coordinators Office can assist U.S. exhibitors with obtaining a booth, advance publicity, product shipment, and customs clearance. In markets without an established international food show, USDA organizes its own American food shows and sales missions. For more information on these programs, contact
Trade Show Office Agency for International Development (AID)AID administers most of the U.S. foreign economic assistance programs. These programs offer export opportunities for U.S. suppliers of professional technical assistance services and commodities (goods, products, equipment, and material). Professional technical assistance services generally offer opportunities for consultant and expert capabilities in agriculture, nutrition, and rural development; education and human resources; health and population; and energy and environmental assessment. Opportunities to export commodities are available through the commodity import programs that AID operates in select AID recipient countries, and through AID's direct procurement of commodities. In addition, AID funds may be available to finance developmentally sound projects in certain recipient countries involving U.S. capital goods and services. U.S. exporters are best positioned to obtain orders by making the local purchasing agencies aware of their products at an early stage. For information on available funds, projects under consideration, and contacts, exporters traveling to developing countries where an AID program is in place may wish to visit the AID mission in the U.S. embassy. For the most part, AID advertises export opportunities for both professional technical assistance and commodities in the Commerce Business Daily, available through paid subscription from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402; Tel: (202) 512-1800; Web site: www.access.gpo.gov/su_docs. The CBD is also available through the Internet; contact Loren Data Corp., 4640 Admiralty Way, Suite 430, Marina del Rey, CA 90292; Tel: (310) 827-7400; Email: info@ld.com; Web site: www.ld.com. Notices of intended procurement of AID-financed commodities are also advertised in the AID Procurement Information Bulletin, available through free subscription from AID's Office of Small and Disadvantaged Business Utilization/Minority Resource Center (OSDBU/MRC), Washington, DC 20523-1414; Tel: (202) 712-1500; Fax: (202) 216-3056. The Bulletin is also posted on AID's web site. Go to http://www.info.usaid.gov/ and look under "Business & Procurement." Global Technology NetworkGlobal Technology Network acts as a central point of contact at the United States Agency for International Development (USAID) for the U.S. business community and as a vital link with the developing countries USAID serves. Through Global Technology Network, the opportunities and information generated by USAID activities are made available to the U.S. business community. Global Technology Network develops and disseminates regional and industry- and sector-specific guides to USAID programs and information and also distributes USAID publications such as the Guide for Doing Business . The network provides information on how to obtain the Procurement Information Bulletin and USAID documents through the Development Information Service Clearinghouse (DISC). Global Technology Network also manages the Environmental Technology Network for Asia (ETNA), a service of the U.S.--Asia Environmental Partnership (US-AEP). ETNA electronically matches business leads, submitted by in-country representatives, to appropriate U.S. environmental companies registered within its database, and faxes announcements within 48 hours of receipt of the leads.
Global Technology Network Trade and Development Agency (TDA)TDA is an independent U.S. government agency that funds feasibility studies, orientation visits, specialized training grants, business workshops, and various forms of technical assistance in developing and middle-income countries worldwide. Contracts funded by TDA grants must be awarded to U.S. companies, thus helping position potential U.S. suppliers of goods and services for follow-on contracts when these projects are implemented. Most TDA funding is granted for feasibility studies in sectors that are of high priority to host governments: agriculture; energy; environment; health care; manufacturing; mining and minerals development; telecommunications; transportation; and water resources. To ensure a satisfactory and useful study, the host governments play an active role in awarding and managing the contract. This cooperation also engenders a cooperative relationship between the host country, TDA, and the business community. In addition, opportunities for technical consultants also arise in connection with definitional missions to investigate the scope of a project, develop a scope of work for a feasibility study, draw up a budget estimate, and make a recommendation concerning TDA support for the study. TDA selects qualified consultants through use of a consultants data base, for which U.S. small businesses are encouraged to register. TDA-funded activities generated approximately $7 billion of U.S. exports between the agency's inception in 1981 and 1995, which amounts to nearly $30 in exports for every dollar invested in TDA activities. Hundreds of companies across the U.S. have benefited from activities supported by TDA, both through direct exports and through long-term enhancement of their market position. TDA's programs are carried out by a Washington-based staff in close coordination with the Department of Commerce, the Export-Import Bank, the Overseas Private Investment Corporation, AID, and other government agencies. TDA also maintains close contact with multilateral and regional development lending institutions to ensure an ongoing exchange of important project information and to keep TDA apprised of critical opportunities for U.S. companies. To be considered for funding, projects must:
General inquiries about TDA's services should be made through TDA's library, located at the agency's office in Rosslyn, Virginia. In addition to providing information about TDA services, the library maintains final reports on all TDA activities. The library also can provide details on purchasing copies of completed feasibility studies through the Department of Commerce's NTIS. The agency has two regular publications: The TDA Pipeline, which is available by subscription, provides U.S. suppliers and manufacturers with timely information on agency-supported projects. The TDA Update contains current items of interest on a variety of program activities. TDA information also is available via the Internet. The home page (at http://www.tda.gov/) features a catalog of TDA library holdings, agency news, information on TDA-sponsored studies, and more. Requests for proposals to conduct TDA-funded feasibility studies are listed in the Commerce Business Daily . For subscription information, contact the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402; Tel: (202) 512-1800; Web site: www.access.gpo.gov/su_docs. For an online subscription, contact Loren Data Corp., 4640 Admiralty Way, Suite 430, Marina del Rey, CA 90292; Tel: (310) 827-7400; Email: info@ld.com. Information on definitional mission opportunities can be obtained by calling TDA's Definitional Mission Hotline at (703) 875-7447. Small and minority U.S. firms that wish to be included in TDA's consultant database and considered for future Definitional Mission solicitations should contact the Contracts Office.
Trade and Development Agency State and Local Government AssistanceMost states can provide an array of services to exporters. Many states maintain international offices in major markets; the most common locations are in Western Europe, Japan, and Mexico. Working closely with the commercial sections of U.S. embassies in these countries, they can provide assistance in making contacts in foreign markets, providing such services as:
In addition, some international offices of state development organizations help organize and promote foreign-buyer missions to the United States, which can be effective avenues of exporting with little effort. Attracting foreign investment and developing tourism are also very important activities of state foreign offices. Increasingly, many cities and counties are providing these same services. Refer to Appendix III, for contacts at both the state and city levels. Business and Service Organization ContactsContacts made through business colleagues and associations can often prove invaluable to U.S. exporters. A colleague with firsthand experience in an international market may give a personal recommendation for an agent, distributor, or potential buyer. Conversely, the recommendation against the use of a representative for credit or reliability reasons may save the firm a number of problems. Attending export seminars and industry trade shows is an excellent method of networking with business people who have international experience. In addition, trade associations can provide a valuable source of contacts with individuals who may wish to share their experience of identifying and selling to buyers and representatives in foreign markets. Banks can be another source of assistance in locating overseas representation. The international departments, branches, or correspondent banks of U.S. banks may help locate reputable firms that are qualified and willing to represent U.S. exporters. In addition, freight forwarders, freight carriers, airlines, port authorities, and American chambers of commerce maintain offices throughout the world. These service firms often have contacts with qualified representatives and can make recommendations to the U.S. firm. Foreign embassy and consulate commercial offices may also be able to provide directories and assistance. Promotion in Publications and Other MediaA large and varied assortment of magazines covering international markets is available to exporters through U.S. publishers. They range from specialized international magazines relating to individual industries such as construction, beverages, and textiles, to worldwide industrial magazines covering many industries. Many consumer publications produced by U.S.-based publishers are also available. Several are produced in national-language editions (Spanish for Latin America, and so on) and also offer "regional buys" for specific export markets of the world. In addition, several business directories published in the United States list foreign representatives geographically or by industry specialization. Publishers frequently supply potential exporters with helpful market information, make specific recommendations for selling in the markets they cover, help advertisers locate sales representation, and render other services to aid international advertisers. For an extensive list of these international publications, look for the Gale Directory of Publications & Broadcast Media, which contains a list of foreign periodicals, with some information on circulation and rates. This directory or others may be available at libraries; Commerce district offices; or in the Department of Commerce's Trade Data Reference Room (Tel: (202) 482-2185; Fax: (202) 482-4614). State departments of commerce, trade associations, business libraries, and major universities may also provide such directories. Television, radio, and specially produced motion pictures may also be used by a U.S. business for promoting products or services, depending on the country. In areas where programs may be seen and heard in public places, television and radio promotions offer one of the few means of bringing an advertising message to great numbers of people. In many countries, particularly in Latin America, various forms of outdoor advertising (billboards, posters, electric signs, and streetcar and bus cards) are widely used to reach the mass audience. Because of the specialized knowledge required to advertise and promote successfully in foreign markets, U.S. firms may find useful the services of a U.S. advertising agency with offices or correspondents abroad. Some U.S. agencies handle nothing but foreign advertising, and some marketing consultants specialize in the problems peculiar to selling in foreign markets. The International Advertising Association, can provide names of domestic agencies that handle overseas accounts. Contact the IAA at 521 Fifth Avenue, Suite 1807, New York, NY 10175, Tel: (212) 557-1133; Fax: (212) 983-0455. Chapter 8Business Travel AbroadBusiness travel abroad can locate and cultivate new customers and improve relationships and communication with current foreign representatives and associates. As in domestic business, there is nothing like a face-to-face meeting with a client or customer. The following suggestions can help U.S. companies prepare for a trip. By keeping in mind that even little things (such as forgetting to check foreign holiday schedules or neglecting to arrange for translator services) can cost time, opportunity, and money, a firm can get maximum value from its time spent abroad. Planning the ItineraryA well-planned itinerary enables a traveler to make the best possible use of time abroad. Although travel time is expensive, care must be taken not to overload the schedule. Two or three definite appointments, confirmed well in advance and spaced comfortably throughout one day, are more productive and enjoyable than a crowded agenda that forces the business person to rush from one meeting to the next before business is really concluded. If possible, an extra rest day to deal with jet lag should be planned before scheduled business appointments. The following travel tips should be kept in mind:
Other PreparationsTravel agents can frequently arrange for transportation and hotel reservations quickly and efficiently. They can also help plan the itinerary, obtain the best travel rates, explain which countries require visas, advise on hotel rates and locations, and provide other valuable services. Since travel agents' fees are paid by the hotels, airlines, and other carriers, this assistance and expertise may cost nothing. The U.S. traveler should obtain the necessary travel documents two to three months before departure, especially if visas are needed. A travel agent can help make the arrangements. A valid U.S. passport is required for all travel outside the United States and Canada. If traveling on an old passport, the U.S. citizen should make sure that it remains valid for the entire duration of the trip. Passports may be obtained through certain local post offices and U.S. district courts. Check your local telephone directory under the Federal Government blue pages; look for Passport Services under the Department of State or Postal Service listings. Application may be made in person or, in some cases, by mail. A separate passport is needed for each family member who will be traveling. The applicant must provide (1) proof of citizenship, (2) proof of identity, (3) two identical passport photos, (4) a completed application form, and (5) the appropriate fees. The cost is $55 per passport ($40 for travelers under 18) plus a $10 execution fee for first-time passports or travelers applying in person. The usual processing time for a passport (including time in the mail) is three weeks, but travelers should apply as early as possible, particularly if time is needed to obtain visas, international drivers licenses, or other documents. If you are leaving in less than three weeks you may be eligible for an expidited passport at an additional cost of $30. Additional information is available from the nearest local passport office or by calling the National Passport Center outside Washington, D.C. Telephone numbers are listed below.
National Passport Center
Boston, Massachusetts Passport Agency
Chicago, Illinois Passport Agency
Honolulu, Hawaii Passport Agency
Houston, Texas Passport Agency
Los Angeles, California Passport Agency
Miami, Florida Passport Agency
New Orleans, Louisiana Passport Agency
New York, New York Passport Agency
Philadelphia, Pennsylvania Passport Agency
San Francisco, California Passport Agency
Seattle, Washington Passport Agency
Stamford, Connecticut Passport Agency
Washington, DC Passport Agency Visas, which are required by many countries, cannot be obtained through the Office of Passport Services. They are provided for a small fee by the foreign country's embassy or consulate in the United States. To obtain a visa, the traveler must have a current U.S. passport. In addition, many countries require a recent photo. The traveler should allow several weeks to obtain visas, especially if traveling to developing nations (embassies and consulates in the United States are listed in appendix IV). Some countries that do not require visas for tourist travel do require them for business travel. Visa requirements may change from time to time. Requirements for vaccinations differ from country to country. A travel agent or airline can advise the traveler on various requirements. In some cases, vaccinations against typhus, typhoid, and other diseases are advisable even though they are not required. Check with the Centers for Disease Control by calling the CDC Travelers Hotline at (404) 332-4559 or go to the CDC Travel Information home page on the World Wide Web at www.cdc.gov/travel/travel.html. Business Preparations for International TravelBefore leaving the United States, the traveler should prepare to deal with language differences by learning whether individuals to be met are comfortable speaking English. If not, plans should be made for an interpreter. Business language is generally more technical than the conversational speech with which many travelers are familiar; mistakes can be costly. In some countries, exchanging business cards at any first meeting is considered a basic part of good business manners. As a matter of courtesy, it is best to carry business cards printed both in English and in the language of the country being visited. Some international airlines arrange this service. The following travel checklist covers a number of considerations that apply equally to business travelers and vacationers. A travel agent or various travel publications can help take these considerations into account:
Assistance from U.S. Embassies and ConsulatesEconomic and commercial officers in U.S. embassies and consulates abroad can provide assistance to U.S. exporters, both through in-depth briefings and by arranging introductions to appropriate firms, individuals, or foreign government officials. Because of the value and low cost of these services, it is recommended that the exporter visit the U.S. embassy soon after arriving in a foreign country. When planning a trip, business travelers can discuss their needs and the services available at particular embassies with the staff of the local Commerce district office. It is also advisable to write directly to the U.S. embassy or consulate in the countries to be visited at least two weeks before leaving the United States and to address any communication to the commercial section. The U.S. business traveler should identify his or her business affiliation and complete address and indicate the objective of the trip and the type of assistance required from the post. Also, a description of the firm and the extent of its international experience would be helpful to the post. Addresses of U.S. embassies and consulates are provided in Key Officers of Foreign Service Posts , a publication available from the U.S. Government Printing Office, PO Box 371954, Pittsburgh, PA 15250-7954; Tel: (202) 512-1800; Fax: (202) 512-2250; Web site: www.access.gpo.gov/su_docs. The cost for this publication is $5.50 for a single copy. Request GPO S/N 044-000-02499-3. A program of special value to U.S. business travelers is the Department of Commerce's Gold Key Service, which is custom tailored to U.S. firms visiting overseas markets. This service combines several forms of Commerce assistance, including agent and distributor location, one-on-one business counseling, prescheduled appointments with key contacts, and U.S. embassy assistance with interpreters and translators, clerical support, office services, and so on. The service is not available in all markets and may be known under a different name in some countries (e.g., RepFind in Mexico). Further information and assistance are available from any local Commerce Department office. CarnetsForeign customs regulations vary widely from place to place, and the traveler is wise to learn in advance the regulations that apply to each country to be visited. If allowances for cigarettes, liquor, currency, and certain other items are not taken into account, they can be impounded at national borders. Business travelers who plan to carry product samples with them should be alert to import duties they may be required to pay. In some countries, duties and extensive customs procedures on sample products may be avoided by obtaining an ATA (Admission Temporoire) Carnet. The ATA Carnet is a standardized international customs document used to obtain duty-free temporary admission of certain goods into the countries that are signatories to the ATA Convention. Under the ATA Convention, commercial and professional travelers may take commercial samples; tools of the trade; advertising material; aircraft and road vehicles; containers and packing materials; exhibition and touring facilities; teaching materials; and cinematographic, audiovisual, medical, scientific, or other professional equipment into member countries temporarily without paying customs duties and taxes or posting a bond at the border of each country to be visited. Carnets do not cover consumable goods (such as food and agricultural products), disposable items, or postal traffic. At press time, the following countries participated in the ATA Carnet system: Algeria, Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Gibraltar, Greece, Hong Kong, Hungary, Iceland, India, Iran, Ireland, Israel, Italy, Ivory Coast, Japan, Luxembourg, Malaysia, Mauritius, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Senegal, Singapore, Sri Lanka, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. Note that many countries will issue carnets for some categories of merchandise and not others. Since new countries are frequently added to the ATA Carnet system, the traveler should contact the U.S. Council for International Business if the country to be visited is not included in this list. Applications for carnets should be made to the same organization. A fee is charged, depending on the value of the goods to be covered. A bond, letter of credit, or bank guaranty of 40 percent of the value of the goods is also required to cover duties and taxes that would be due if goods imported into a foreign country by carnet were not reexported and the duties were not paid by the carnet holder. The carnets generally are valid for 12 months. Contact the U.S. Council for International Business, 1212 Avenue of the Americas, New York, NY 10036; Tel: (212) 354-4480; Fax: (212) 575-0327; Web site: www.uscib.org. The Council also maintains an office in Washington, DC and offices around the country which can issue ATA Carnets. Further information on the ATA Carnet system can be found in Carnet: Move Goods Duty-free Through Customs, an informative free brochure published by the council. Cultural FactorsBusiness executives who hope to profit from their travel should learn about the history, culture, and customs of the countries to be visited. Flexibility and cultural adaptation should be the guiding principles for traveling abroad on business. Business manners and methods, religious customs, dietary practices, humor, and acceptable dress vary widely from country to country. For example, consider the following:
Understanding and heeding cultural variables such as these is critical to success in international business travel and in international business itself. Lack of familiarity with the business practices, social customs, and etiquette of a country can weaken a company's position in the market, prevent it from accomplishing its objectives, and ultimately lead to failure. Some of the cultural distinctions that U.S. firms most often face include differences in business styles, attitudes toward development of business relationships, attitudes toward punctuality, negotiating styles, gift-giving customs, greetings, significance of gestures, meanings of colors and numbers, and customs regarding titles. American firms must pay close attention to different styles of doing business and the degree of importance placed on developing business relationships. In some countries, business people have a very direct style, while in others they are much more subtle in style and value the personal relationship more than most Americans do in business. For example, in the Middle East, engaging in small talk before engaging in business is standard practice. Attitudes toward punctuality vary greatly from one culture to another and, if misunderstood, can cause confusion and misunderstanding. Romanians, Japanese, and Germans are very punctual, whereas people in many of the Latin countries have a more relaxed attitude toward time. The Japanese consider it rude to be late for a business meeting, but acceptable, even fashionable, to be late for a social occasion. In Guatemala, on the other hand, one might arrive anytime from 10 minutes early to 45 minutes late for a luncheon appointment. When cultural lines are being crossed, something as simple as a greeting can be misunderstood. Traditional greetings may be a handshake, a hug, a nose rub, a kiss, placing the hands in praying position, or various other gestures. Lack of awareness concerning the country's accepted form of greeting can lead to awkward encounters. People around the world use body movements and gestures to convey specific messages. Sometimes the same gestures have very different meanings, however. Misunderstanding over gestures is a common occurrence in cross-cultural communication, and misinterpretation along these lines can lead to business complications and social embarrassment. Proper use of names and titles is often a source of confusion in international business relations. In many countries (including the United Kingdom, France, and Denmark) it is appropriate to use titles until use of first names is suggested. First names are seldom used when doing business in Germany. Visiting business people should use the surname preceded by the title. Titles such as "Herr Direktor" are sometimes used to indicate prestige, status, and rank. Thais, on the other hand, address one other by first names and reserve last names for very formal occasions and written communications. In Belgium it is important to address French-speaking business contacts as "Monsieur" or "Madame," while Dutch-speaking contacts should be addressed as "Mr." or "Mrs." To confuse the two is a great insult. Customs concerning gift-giving are extremely important to understand. In some cultures gifts are expected and failure to present them is considered an insult, whereas in other countries offering a gift is considered offensive. Business executives also need to know when to present gifts--on the initial visit or afterwards; where to present gifts--in public or private; what type of gift to present; what color it should be; and how many to present. Gift-giving is an important part of doing business in Japan, where gifts are usually exchanged at the first meeting. In sharp contrast, gifts are rarely exchanged in Germany and are usually not appropriate. Gift-giving is not a normal custom in Belgium or the United Kingdom either, although in both countries, flowers are a suitable gift when invited to someone's home. Customs concerning the exchange of business cards vary, too. Although this point seems of minor importance, observing a country's customs for card giving is a key part of business protocol. In Japan, for example, the Western practice of accepting a business card and pocketing it immediately is considered rude. The proper approach is to carefully look at the card after accepting it, observe the title and organization, acknowledge with a nod that the information has been digested, and perhaps make a relevant comment or ask a polite question. Negotiating--a complex process even between parties from the same nation--is even more complicated in international transactions because of the added chance of misunderstandings stemming from cultural differences. It is essential to understand the importance of rank in the other country; to know who the decision makers are; to be familiar with the business style of the foreign company; and to understand the nature of agreements in the country, the significance of gestures, and negotiating etiquette. It is important to acquire, through reading or training, a basic knowledge of the business culture, management attitudes, business methods, and consumer habits of the country being visited. This does not mean that the traveler must go native when conducting business abroad. It does mean that the traveler should be sensitive to the customs and business procedures of the country being visited. Further ReadingPassport to the World series. A series of books on business cultures in more than 25 different countries. Cost: $6.95 each. Available from World Trade Press, 1450 Grant Ave., Suite 204, Novato, CA 94945; Tel: (415) 898-1124; Fax: (415) 898-1080; Email: WorldPress@aol.com; Web site: www.worldtradepress.com. Blunders in International Business. By David Ricks. Full of anecdotes covering mistakes and blunders from all aspects of international business including marketing, management, production, translation, and strategy. Cost: $20.95. Available from Blackwell Publishers, 238 Main St., Cambridge, MA 02142; Tel: (617) 876-7000, (800) 903-1181; Web site: www.blackwellpublishers.co.uk. Do's and Taboos ... A series of paperback books with tips on international business and etiquette. Titles include Do's and Taboos Around the World, Do's and Taboos of Hosting International Visitors, Do's and Taboos of International Trade, Do's and Tabooos of Preparing for your Trip Abroad, and Do's and Taboos of Using English Around the World. All are by Roger E. Axtell and are published by John Wiley & Sons, 605 Third Ave., New York, NY 10158-0012; Tel: (212) 850-6000, (800) 225-5945 (orders); Fax: (212) 850-6008. Intercultural Interacting. By V. Lynn Tyler. Explains the elements of interacting with people from other cultures; includes learning exercises. Available from David M. Kennedy Center for International Studies, Publication Services, Brigham Young University, P.O. Box 24538, Provo, UT 84602-4538; Tel: (801) 378-6528, (800) 528-6279.
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