Millions of dollars’ worth of products are traded on the global market daily. The U.S. is known throughout the world for high quality, innovative goods and services as well as sound business practices. Selling goods and services in foreign markets is an excellent way to increase sales, profits and market share.
People around the globe are increasingly using their electronic devices to buy goods and services; businesses that sell online can potentially reach billions of consumers in markets all over the world. The ease of connectivity and global demand have reduced the barriers to entering overseas markets.
Since 95 percent of the world’s consumers live outside of the U.S., conducting business globally has become an essential part of the overall strategy for many companies. With increased export production and sales, companies can achieve economies of scale and spread costs over a large volume of revenue, reducing unit costs and increasing profitability and competiveness. Exports are a logical part of growth and allow companies to expand their businesses simply by offering new markets access to their products.
Many companies are not exporting because they believe that the process is complicated and risky. If your company has been successful in the U.S. market, then there is a very good chance that it will be successful selling abroad. The world is your market, and these 10 steps will help get you on your way to selling and exporting your products overseas.
1. Identify the most profitable and fastest growing international markets for your products. There are government agencies, such as the U.S. Export Assistance Centers and the Small Business Administration, that provide trade counseling and market intelligence, and can connect you with additional trade resources.
2. Use due diligence to learn about your customer. The U.S. Export Administration Regulations (EAR) prohibit trade with specific individuals, companies, institutions and organizations. Research export enforcement websites to identify the Denied Persons List, Debarred List, Sanctioned Countries List, and Common Red Flags List. Information on these lists can be found at www.export.gov, www.bis.gov, and www.treasury.gov.
3. Identify your product by familiarizing yourself with regulations or licenses that may apply to the goods that you plan to export.
4. Identify the Harmonized Tariff Classification / Schedule B number(s) for your product(s). You can find them at www.census.gov/scheduleb. These numbers help determine applicable import tariff rates and whether the products qualify for a preferential tariff under a free trade agreement. They are also used to file information in the Automated Export System (AES) with U.S. Customs.
5. Identify the terms of sale by using the correct Incoterms. They are published by the International Chamber of Commerce and provide a set of rules for interpretation of commonly used trade terms.
6. Your transaction can be financed by using a Letter of Credit to insure that you get paid for the goods. It is a financial document issued by a bank at the request of the consignee guaranteeing payment to the shipper of the cargo if certain terms and conditions are fulfilled.
7. The documentation that you will be responsible for preparing are the Shipper’s Letter of Instruction for the Freight Forwarder, the Commercial Invoice and Packing List.
8. Choose a good Freight Forwarder who will serve as your agent for moving the cargo overseas. They can assist in preparing export documentation, securing letters of credit, insuring the cargo is properly packed and labeled, and filing the necessary paperwork with U.S. Customs. They can also book the cargo under their volume contracts with the carriers to offer the most competitive rates for new exporters.
9. The cargo needs to be insured. The insurance certificate is used to assure the buyer of the goods that insurance will cover any loss or damage of the cargo during transit. The Freight Forwarder can provide this for the shipment.
10. The exporter must keep accurate records by keeping copies of all export documentation and invoices on-site. Your company should have written export procedures and an internal compliance officer.
Many companies participate in the global market with the assistance of third-party logistics (3PL) and fourth-party logistics (4PL) providers, using external organizations to execute logistics activities and to design, build and run comprehensive supply chain solutions. Logistics assistance makes the path to global trade even easier.