Understanding foreign trade
How to take the decision to export
determination of export prices
Packaging and labeling
Technical terms of foreign trade
Participation in trade demonstrations
Preparing for export
Websites on export
UNDERSTANDING FOREIGN TRADE
Theme: How to take the decision to export?
UNDERSTANDING FOREIGN TRADE
THEME: PACKAGING AND LABELING
UNDERSTANDING FOREIGN TRADE
THEME: SUPPLY CHAIN MANAGEMENT: TRANSPORT
Transportation is a strategic element that enhances the competitiveness of the seller. Exporting companies choose their mode of transport based on:
o Cost: Achieve export at a minimum cost. To assess the cost, the company must take into account not only the price of freight, but also incidentals: the routing, the cost of intermediaries, customs formalities, packing, insurance, post-routing , so forth.
o Time: Get delivery times compatible with the characteristics of the goods and the demand of the importer. The total transport time and meeting deadlines are factors of competitiveness increasingly important in a context where the "just in time" and the concept of "zero inventory" have become criteria of good management. In addition, some products (perishable or high value) only support short down time. The delay must be assessed by the exporter taking into account the overall export, not just the main transport. The time can be a decisive criterion in the case of exceptional orders for example, or urgent spare parts delivery.
Other criteria such as the type of product, quality and country of the buyer will determine the choice of the principal mode of transport. Exporters often entrust these operations to an external partner such as the forwarder, who will organize logistics services.
B. Modes of transport
Six (6) modes of transport are available to the exporter for the delivery of its goods towards the customer. They each have advantages and disadvantages that the exporter is required to study to optimize its transportation solution.
C. The choice of the transport solution
An analysis of the available infrastructure for the exporting company must be made in advance before choosing the right solution for the company. This will include:
Logically, companies are often faced with the choice between:
To choose the transport, the exporter must take into account the constraints of the external environment, technical and commercial constraints of the product, as well as the impact on cost, quality and safety of all modes of transport taking part in the shipping of your goods. Presenting on tables assessments of these criteria, one will be able to compare different solutions and to make a definitive choice.
The difficulty of making the final selection lies in the fact that the different options can not be taken sequentially, that is to say one after the other. Indeed, every decision affects and influences, to varying degrees, other choices to make throughout the supply chain. One example is the link between the package and the mode of transport, between the frequency of shipments and inventories, between the duration of transport and inventory, etc.
Moreover, the choice of transport logistics is the essential extension of the company's commercial policy. It is therefore important in the development of the company's goals (which ultimately reflect its needs), that the set of remarks made by all the departments, and especially the production and commercial services, are taken into account.
Theme: Technical Glossary of Foreign Trade
Tax-free purchases: purchases exempt of the added tax value that can be performed on the national territory as a foreign resident (third countries).
Factoring: technical recovery of receivables by specialized companies in the event of default by the debtor.
Sales representative or commission agent: independent status, they act in the name of the company they represent. They are paid by commission.
Certificate of origin: a document that provides proof of the country where the product was made (that is to say, its origin) to comply with customs or commercial requirements. This is a common export document required to export goods to many foreign countries.
Customs agent: service provider for customs transit formalities, import and export on its behalf or on behalf of operators with customs clearance offices.
General terms and conditions of sale "All clauses that constitute the offer by a professional seller to the likely purchasers of its products" (source: Commercial Lamy)
Lading (sea or air): contract between the carrier or freight forwarder and the owner of the goods. The overseas buyer needs this document to take possession of the goods.
Against delivery: payment technique by which the carrier delivers and receives the amount of the transaction.
Vienna Convention: it concerns the sales contract and is universal as it is developed under the auspices of the United Nations. It applies to France since. January 1988. It has been ratified by over 30 countries.
Documentary credit (sights or time): Technical international payment whereby the buyer's bank agrees to pay the seller's bank at the time of the transaction.
SAD, Single Administrative Document: harmonized form set up by the European Union on. January 1988 required for operations to third countries, DOM ...
DEB, Declaration of Exchange of Estate: monthly document completed by exporters who carry out intra-Community transactions.
Customs Declaration: Document that usually accompanies exported goods in which we find information such as the nature of the goods, their value, the recipient and their ultimate destination. Required for statistical purposes, this statement accompanies all goods subject to a control that is exported under a relevant export license.
Customs duty: tax on goods entering or leaving the customs territory. Rights may be ad valorem, calculated on the value of the goods, or applied depending on the weight, volume, number.
Tariff classification of a product: Product classification in the customs nomenclature. It consists of a code consisting of 1. digits and a letter. It allows to fix the tariffs applicable to each product.
Pro forma invoice: document presenting the commercial offer of the French company and describes the goods as well as all conditions related to the delivery, price and payment.
Delivered at place: Also known as incoterms, International Commercial Terms, set up by the ICC International and defining the reciprocal obligations of the seller and the buyer relating to costs, risks and documents. Incoterms are 13 in number.
Letter of credit: Instrument issued by the bank on behalf of an importer that guarantees payment of goods and services to the exporter, provided that credit conditions are met.
Documentary collection: international payment technique by which the seller instructs its bank to exercise an intermediary between himself and his buyer, giving it the commercial documents and a collection order.
Delivered Ex Ship: The exporter or seller must make the goods available to the buyer on board the ship at the port designated in the contract. The risk of loss or damage shall pass to the buyer once the goods cross the ship's rail.
Delivered Ex Works: This minimal obligation requires the seller to make the goods available to the buyer from the factory or establishment. Seller is not responsible for loading the goods on the vehicle provided by the buyer, unless there has been a further agreement to this effect. The buyer assumes full responsibility for the transport of goods from the seller's premises to their final destination.
Delivered Ex Quay: The exporter or seller makes the goods available to the buyer on the quay at the destination specified in the sales contract. There are two types of conditions in quay contracts: cleared to dock, whereby the seller is required to pay the import duties and dock duty, under which the liability to pay the rights lies with the buyer.
Delivered duty paid: This formula has the effect of rendering the maximum liability to the exporter or seller regarding the delivery of goods, the management of the risks of damage or loss and payment of fees. It is located opposite the words "Delivered Ex Works" (see above), under which the seller assumes the least demanding responsibility.
Delivered at frontier The exporter or seller has fulfilled its obligations when the goods reach the border, but before they cross the "customs border" of the importing country named in the sales contract. The term is generally used when the goods are transported by rail or truck.
SWIFT: "Society for Worldwide Interbank Financial Telecommunication." Founded May 3, 1973 by 239 banks belonging to 1. countries that developed a computer network for banks to channel financial transactions.
Forwarders: service provider who is responsible on behalf of customers of all operations relating to their goods.
UNDERSTANDING FOREIGN TRADE
THEME: PARTICIPATION IN BUSINESS EVENTS
Participation in trade events is by far, the best communication tool, especially in the context of exploring new markets. Before any exposure approach, it is recommended that companies participate first in these events as visitors. Indeed, the visit allows the company to choose the exhibition, identify strategic locations and to get a general idea before participating as an exhibitor.
I. The visit of the trade event
Visiting an exhibition is the first step in preparing its own exposure. Companies often visit international events as part of their market research where they update their knowledge and obtain documentation.
The aim of the visit is to learn about trends, new technologies, in terms of new products and establish initial contacts.
Visiting a show allows especially to get an idea of the different events and to select the one which is likely to suit the company's products. It also requires serious preparation, it is an investment that must be profitable to the maximum. It is impossible to visit all the stands, it is advisable to consult the catalogue of exhibitors and to identify the most interesting stands.
Unlike in Africa, where rooms are medium to small size, trade shows in Europe are great and it is therefore not possible to visit all the booths; then it is advisable to consult the catalogue of exhibitors and to identify the most interesting stands.
II. Participation in the trade event
Participation as an exhibitor at a fair or international exhibition will allow the company to:
Participation in a fair allows to establish personal contact between the company and a large number of targeted potential buyers and this in one place and in a short time. This mode of communication is very tempting for exporters. However, participation in fairs and exhibitions is part of a medium-term context. Indeed, exposing once does not always achieve good results immediately and usually it is necessary to renew its participation over many years.
The steps of the preparation for participation in the trade event are:
1. Selection of the event
Of all the exhibitions that exist on the market, the company must choose to exhibit in one or several that are most suited to its needs, objectives, products and financial capabilities.
The company must check the quality and suitability of the event in relation to its objectives by assessing certain criteria such as:
2. Organization of the event
Participation in a fair or exhibition is not improvised. To put everything on his side, the exporter must plan, prepare and organize the event and then monitor and follow up. You should know that preparation is the decisive step for that is where the future success or failure of the exhibition lies.
Here's an example of a schedule of tasks to perform in preparation for a participation:
At the end of the event the company must:
Here's a sheet with all the expenses that you might want to bear in mind for in the context of participation in fairs and that you need to consider when building your projected budget.
Source : Interex
This list is not exhaustive.
As well as exporters can consult other national and international sites that give information on the various trade events
Once the exhibition is over, it is necessary to make an assessment of the participation at the show. Following-up an exhibition is strategic. It is to send in the week after the show, documentation to visitors and thank them for their visit to the stand.
A good monitoring can finally allow to enter into negotiations with new customers. Participation in trade events is the best way to become known and to promote products. The company enhances the loyalty of its customers and enhances its file by foreign prospects. It is a way to access new markets while developing its brand image.
The development of an export plan (or international business plan) is the important step that would evaluate the company's ability to support an export initiative of a product and the potential export of the product.
The international business plan is the roadmap to enable the company to increase its presence and performance abroad.
The drafting of international business plan is in the format below:
1. Make a situational analysis
The situational analysis focuses on the analysis of business performance and product position in international markets
1.1. Analysis of business performance
The analysis shall include the company's success reasons. We need to identify the comparative advantages in respect to local and foreign competition, strengths and weaknesses, challenges and issues that reflect the internal diagnosis and analysis of its position with regard to internal and external competition.
The result of this analysis is to identify the products and assess their potential for export.
1.2. Products - international markets
This part describes the company choices regarding products-markets couples covered by the International project. There is a portrait of foreign markets and the various options available to the company as to the supply, marketing, investment, etc.
This section should include obtaining the following information:
2. Project Objectives
The objectives are the results of assumptions that the company intends to achieve and are based on information gathered and analyzed carefully by the company in the previous section. All actions to be implemented should aim to achieve these objectives.
The objectives are usually described in three (three-year) to five (five-year) years and include:
3. Entry Strategies
This part focuses on the explanation and justification of the choice of means used to penetrate the target markets (export, import, etc.). The content should thus describe entry strategy that offers the best chance to achieve the objectives defined above. A multitude of factors must be considered in the definition of the input mode, for example:
4. Action Plans
The action plans must describe all the resources and operations to be implemented to achieve the objectives of the international project. It includes several subsections. It should specify how each company's resources and efforts will be invested consistently. All action plans are linked together and form a coherent chain.
The various action plans to develop include the following:
This is to present first the main threats that the international project is exposed to and then develop ways or mechanisms to cope.
The table below gives an example of the approach.
6. Implementation program
The implementation includes the operational aspects of the plan: a timetable in the form of a schedule describing the details of the activities, deadlines and target contacts. The implementation of the program also includes the definition and description of the monitoring and control systems (monitoring and evaluation). The following components are some examples:
UNDERSTANDING FOREIGN TRADE
Major websites on international trade