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Exporting Basics

Many companies do not export at all or as much as they could. The U.S., for example, is the world's largest exporting nation, but it has one of the lowest percentages of exporting companies. Fewer than 15% of all U.S. manufacturers export. Why don't more companies export? The usual rationale is "I'm satisfied with the domestic market" or "I'm too busy with the domestic market to think about exporting." That's understandable in very large, lucrative markets, such as the U.S. However, this is a shortsighted view. In effect, these companies are saying "I'm not interested in the additional sales that exports could bring." Yet, if asked whether they would actually turn down a sales order merely because it came from abroad, many might answer, "Of course not".

What, then, are the real deterrents to exporting? Mainly, fear and ignorance, often expressed as "I'm too small," "I can't afford it," "I can't compete," "It's too risky," "It's too complicated." These are myths and misconceptions. All can be overcome with guidance and readily available assistance.

Only large firms with name recognition, ample resources, and export departments can export successfully. False! The vast majority of exporting firms in most countries are small and medium-sized enterprises (SMEs). Many have fewer than 50 employees and annual sales in the $1-10 million range. It's true that large firms typically account for far more total exports (over 85% in the U.S.), but SMEs dominate the world’s exporting population.

I don't have the money to hire people, market myself abroad, or expand production if I get new export business. Not true! There are low-cost ways to market and promote abroad, handle new export orders, and finance receivables. These don't require hiring new staff or setting up an export department. Low-cost help is available from the Internet, as well as federal, state and local agencies. At little or no cost, for example, you can get product and country market research, worldwide market exposure, generate trade leads, and find qualified overseas distributors to represent you. If you need start-up or working capital for export purposes, consider loan guarantees from governmental sources, such as the U.S. Small Business Administration (SBA) and counterparts in other countries.

My products are unknown and my prices too high for foreign markets. Not necessarily. The world is large, with varied needs and interests. If your product is bought domestically, it might well be wanted somewhere else in the world. What makes your product sell in the home market can help it sell abroad. Price is important, but it is not the only selling point. Other competitive factors are need, utility, quality, service, credit, consumer taste - these may override price. Don't assume your price is uncompetitive. Your products could still be a bargain in strong-currency countries, even after adding overseas delivery costs and import duties.

I might not get paid. I might get taken. I might break a law I didn't know about. Not likely! Selling anywhere has risks, but they can be reduced with reasonable precautions. To assure you get paid, use Letters of Credit (L/Cs). If customers want credit, use low-cost export credit insurance programs. To avoid possible scams, check references through the Internet, your bank, or an international credit reporting agency. While trade laws vary by country, most are straightforward and non-threatening. If in doubt, look for relevant country trade regulations on the Web. For legal advice and help with contracts, protecting intellectual property, etc., consult a lawyer specializing in international trade. Exporting Is too Complicated

Exporting is too complicated; I don't know how. Wrong! You don't need to be an expert to export. You can use outside experts to deal with the complications, including Export Management Companies (EMCs), freight forwarders, and overseas agents and distributors. Between them, they can represent you, find overseas customers, present you with sales orders, handle all the export paperwork, and deliver the goods. You fill the orders and get paid for the sale. You pay them a fee or commission. If export business warrants, hire your own expert. Or, become more knowledgeable yourself. This export guide can help demystify exporting for you. Personalized "how-to" counseling is available at no cost from many local trade assistance organizations. Export workshops and computerized export tutorials are other ways to learn at modest cost. Once you learn more and gain confidence, you can better decide how much to do yourself and how much to rely on intermediaries.