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CENTRAL AFRICAN REPUBLIC EXPORTER'S MANUAL

  • Understanding foreign trade
  • Exporter's manual
  • How to take the decision to export
  • determination of export prices
  • Packaging and labeling
  • export financing
  • supply management
  • Technical terms of foreign trade
  • Participation in trade demonstrations
  • Preparing for export
  • Websites on export
UNDERSTANDING FOREIGN TRADE
EXPORTER'S MANUAL

Theme: How to take the decision to export?
 

The decision to export must meet the first requirement which is to define a clear and precise strategy. But before that, it would be important to know the benefits and risks of export business.

 

1. The benefits and risks of export for companies are:

 

1.1. The benefits of export for businesses are:

 

¡ Increase your turnover by

 - Benefiting from economic growth in some regions of the world,

 - Expanding your market opportunities;

 - Increasing your profitability

To the extent that your export prices allow adequate profit margins, your positive results should improve.

¡ -Gaining notoriety: You improve the reputation and expertise of your business internationally,

¡ -Learning more about the competition: You will expand your knowledge of your industry by identifying foreign competitors and you are also pushed to develop new selling points, and improves your sales pitch globally.

¡ -Better use of your production capabilities: If your company is not operating at full and if its facilities are underutilized, it will be able to increase its production through exports.

¡- Revitalizing your business: Exporting brings a breath of fresh air within the company and the fate of its marketing practices.

 

The decision to export must meet the first requirement which is to define a clear and precise strategy. But before that, it would be important to know the benefits and risks of export business.

  

2. Definition of an export strategy

 

To sustainably export and avoid costly mistakes, the exporter must develop a coherent strategy for export.

The strategy can be defined as:

 - The means by which the company chooses the areas of activity in which it intends to be present;

 - And the allocation of resources to remain and grow.

The export strategy is assessed across three dimensions:

 (i) Strategic segmentation is a process that identifies a group of potential buyers, to which is presented an offer capable of satisfying its ideal needs and expectations. In other words, a market segment is to fragment into distinct sub-sets, each of these subgroups may then be the object of a specific commercial approach. A segment is deemed to be of an optimal size when it offers to the business the chance to be a preferred supplier.

 (ii) competitive positioning

Once the segmentation has been performed and the target segment selected, the company must ensure that its offer will be favoured over its competitors and meet the market expectations in terms of benefits sought, taking into account the habits and use of the product.

 (iii) Technological innovation: innovation can play a key role in product positioning.

The definition of the strategy allows the company to focus its efforts to achieve the goals it has set, including identifying and maintaining market segments where it can enjoy a strong bargaining power.

 

3. The various stages of the development of the export strategy

 

It is important to develop a strategy following the following steps:

 

3.1. Identification and selection of the target market

 

To successfully export and ensure sustainable market penetration, the exporter must identify the target export markets and estimate as accurately as possible the export potential of its products in these markets.

 

The selection of target markets depends on many factors, including:

 - Characteristics of the product to be exported;

- The company's production capacity;

- Customs regulations of foreign countries, interest and accessibility of markets based on own resources of the exporter.

 

3.2. Product selection

 

The choice of product is crucial to success in export markets. For a product to sell well in foreign markets, it is necessary to consider the following:

 ¡Trends of exports / imports:

If the product is imported in a market, the buying perspective are great.

 ¡Supply Base:

To meet foreign demand, one must ensure regular supplies of inputs (raw materials or components incorporated into products for export). It is therefore essential to have a stable and regular supply base.

 ¡ Production capacity:

The ability of the company's production and delivery time to customers is also an important point for the success of the product in the domestic market as well as abroad. Indeed, delivery delays and non-compliance with provisions damages the image and credibility of the company.

 ¡Product Adaptation:

It is important to constantly monitor the needs and preferences of foreign markets in order to adapt to the opportunities in these markets to better exploit them. The company will be able to offer products corresponding to consumer demand. It is often necessary to change the colour, design, taste or packaging and other product characteristics.

 ¡Arrangements for the provision of after-sales services

 When the product requires an after-sales service, the company must make arrangements in foreign markets or entrust a distributor / agent for the service and maintenance after sale and supply spare parts. If the exporter does not have the technical and financial resources to provide these services, the product will not succeed in foreign markets.

 

3.3. Marketing of the product or choice of a sales network

 

Several sales and distribution circuits exist in different world markets. The various possibilities are:

 · Use of Agents for export, sales agents or commission agents;

 · The use of machines:

 · The use of established distribution networks:

 · The use of mail-order houses

 · The use of Export Development Corporations (SDE):

 · The use of wholesalers:

 · Direct sale to the end user:

 · The Sales Representative:

 

4. Mistakes to avoid when exporting

 

The most common errors are:

-Lack of assistance of a qualified expertise on foreign markets, lack of mastery of the establishment of a marketing plan and of the elaboration of an international strategy allowing to reach the fixed goals.

- Unsuitable choice of distributors or sales agents abroad.

- Answer to all orders from around the world, instead of focusing on one or two geographic regions to meet priority.

- Not paying sufficient attention to the needs and requirements of foreign customers and distributors as well as their national counterparts.

- Assuming that a product associated with a particular marketing method is suitable for all countries.

- Not being willing to modify the product to comply with regulations and cultural preferences of the foreign country.

- Not printing the mandatory information service and sales collateral in different languages.

-Not using the services of an export management company when the company finds it difficult to carry on its own.

- Not considering entering a joint venture (JV) or licensed manufacturing when the company has difficulties in access to foreign markets due to its own import restrictions, lack of resources production or to a limitation of a product line.

 

UNDERSTANDING FOREIGN TRADE

 EXPORTER'S MANUAL
 
 Theme: Determination of export price
 

 

1)   How to set the price of export products?
 
 

The establishment of a strategic price is one of the most important factors in achieving financial success of an export project.

 

To establish a realistic export price, and therefore an appropriate profit margin, it must take into account the cost of production and delivery, competition and demand. We must also understand the variables of your target market as well as all additional costs incurred in the export, including:

 - Exchange rate;

 - Market research and credit checks;

 - Comprehensive insurance and creditor insurance;

 - Transport costs of the goods at destination;

 - International postage rates, telephone charges and telegraphy;

 - Wharfage and shipping;

 - Commissions, training and other costs related to representatives abroad;

 - Consultants and freight forwarders; and

 - Packaging costs, marking and labeling

  
 The fixed price will reflect the product's value, condition, quality, life cycle and the retained Incoterm.

The factors involved in the development of the prices are mainly: the competitive situation, the level of demand for the type of product on the market referred not to mention the costs of transportation.

  • On competition: In overseas markets as the domestic market, few companies can afford to fix a price without considering the price of their competitors. The rule would be that while many competitors are already on the market, you would probably set a price equal to or less than the market price to capture market share. However, if your product or service is new on the market, you may be able to set a higher price than competitive prices.
  • On market demand: In overseas markets as well as on the domestic market, demand affects the price. We need to know what is the price that the market can absorb. For most consumer goods, per capita income is a fairly good way to gauge a market's ability. In most industrialized countries, this income is similar to that of Canada or the US, but it is much lower in the rest of the world, especially in African countries. Some products and services are subject to demand so strong that the per capita income has no impact on the sale price, but in the less prosperous countries, the best solution is usually to simplify the product or service in order to lower the price. Remember that the value of the currency has an effect on price. You should therefore take account of fluctuations in exchange rates and the comparative value of the CFA franc (purchasing power parity).
  • Regarding the pricing strategy: The pricing strategy is based on the objectives in relation to the market: are you looking for example to enter a new market? Looking for long-term growth, or is it to sell surplus production ? You may have to tailor your marketing and pricing objectives to certain markets. Thus, the pricing strategy will not be the same if you are targeting a developing country where per capita income is probably low, or a country with a higher per capita income.
 
Be aware that many pricing strategies exist:
 

- Fixed Price - The price is the same for all customers.

Flexible pricing - The price varies according to the type of customers.

Full Cost - The price covers the fixed costs and variable costs of the export sale.

Marginal cost - The price covers only the variable costs of production and export, but the overhead and other fixed costs are absorbed by sales in the domestic market.

Penetration pricing - The price is reduced in order to attract more customers, discourage competitors and gain quick market share.

Market skimming - The price is set to rise to attract the wealthiest clientèle in a market where competition is low.

After determining your costs and chosen your pricing strategy, you need to establish a competitive price that gives you an acceptable profit margin.

 
 
2) How the exporter can measure the competitiveness of a fixed price?
 
 
 
Knowledge of competitors' prices can direct the company's pricing policy. Indeed, competitors' prices are a reference point. They allow an exporter to determine whether the price he has fixed for a given product is competitive in a particular market. For these prices, several methods are available: the price collections are to go directly to the outlets. One can also check prices in the catalogues of competition. Information on product competitiveness in foreign markets can also be gathered from professional associations and export promotion organizations.
 
Prices can be aligned the prices of competitors if qualities of products are similar. If you are offering a lower quality product, a lower price will be justified, and vice versa. In fact, the price reflects the competitive positioning of the product.
 

So we will consider several parameters in the adoption of a pricing strategy.

  • High price strategy: This strategy can be adopted when the company seeks above all to defend its exclusive image. This approach provides substantial marginal profits and gains a distinctive value to compete with the target market. However, it may attract competition in this market. 
  • Low price strategy:   Many circumstances can lead a company to lower its prices. The first is excess production capacity. In this case, the company seeks to make additional sales. The second is a decline in market share due to increased competition. Such a strategy can also be followed when seeking to get rid of surplus merchandise. But this approach has its dangers: the risk of degradation of image, customers can doubt the quality of the products and turn to other companies. On the other hand, lower prices not followed by volume effect considerably weakens the financial means.
  • Optimal Pricing:   This is an intermediate strategy. It allows the company to face competition, to achieve an adequate profit margin and expand its market share. The practice of low prices can be considered for the long term. However, a company that plans to adopt such a strategy, must know the competition's prices, to avoid being attacked by enticing offers.
 
Source: 

The information published on this page is from the National Bureau of Technical Studies and Development (BNETD)

Abidjan, Ivory Coast

UNDERSTANDING FOREIGN TRADE
 EXPORTER'S MANUAL

 

THEME: PACKAGING AND LABELING

 

 

A. Packaging

 

1)   Package Function

During their transport, goods are exposed to various risks: breakage, deformation, damage, climatic hazards such as humidity, heat or freezing. These goods can be very sensitive to corrosion and the climatic environment during transportation. The degrader agents are: water, salt air, dust, sunlight, radiation, electrolytic phenomena, etc.

 Packaging is an essential characteristic of the product that the exporter should not overlook. The packaging has both technical and commercial functions. Indeed, there are three levels of packaging:

  • logistics packaging which enables the handling, storage, transport and distribution;

  • protective packaging which serves to protect and preserve the product;

  • vendor packaging which supports the commercial message which helps the sale.

 

To succeed with the successful completion of export, the exporter must carefully define the proper packaging, a key point for the preparation of transport.

 

 

2)    The type of packaging suitable for products to be exported 

 

The importance of packaging varies with the nature of the goods transported, the mode of transport, duration and itinerary. For example, air travel demands a lighter packaging than maritime transport to simplify handling for loading and unloading, the airlines use small containers whose wife profile shapes of carrier aircraft cabins.

 To avoid any misunderstanding with the client, it is recommended that the exporter specifies in the contract that the type of packaging must protect the goods during transportation and throughout the storage period, based on International packaging standards, as well as the standards and regulations in force in the target market.

 The exporter must provide practical documentation of packaging ISO standards.

 The main standards available to operators are: Anfor (France), DIN (Germany), BS (UK), ASTM and ANSI (USA).

Some packages are increasingly banned from entering the European Union, for environmental reasons.

 Exceptional operations require grading by expert packing and loading, typically requiring review in the factory and at load time. It takes a duly documented record: details of the insurer, commercial references for packaged goods, place of transport, packaging arrangements, handling, storage, etc.

 

3) Les critères à prendre en compte pour le choix de l’emballage adéquat

 

Autrefois, les préoccupations principales des exportateurs en matière d'emballage étaient la protection du produit et l'économie.

Au fil des temps, les mentalités ont changé, la commodité et la promotion sont progressivement reconnues par les fabricants. Aujourd'hui, l'écologie devient de plus en plus prise en considération.

 

 Les consommateurs aussi bien que les importateurs apprécient le caractère pratique et écologique introduit par les entreprises dans la conception, le conditionnement et l'emballage de leurs produits. Les informations peuvent être puisées aux nombreux instituts ou associations techniques d'emballage, chez les fournisseurs des matériaux pour emballages, ainsi que dans les revues spécialisées.

 

Les principaux aspects techniques et commerciaux de l'emballage sont les suivants:
 

  • fulfilling a function of capacity that is as much influenced by technical constraints and commercial constraints. The nature of the package depends, for example, on the composition and volume of the product;

  • it takes part in the product in that it is an integral component of the product. A practical package should facilitate the use of the product. It can, for example, help the handling of the product by distributors and consumers, simplify conditions of use (easy opening, measuring cap, spackling, ...), and may constitute a guarantee of inviolability or ffreshness of the product;
  • first contact between the consumer and the product, it must attract the consumer's attention, help identify and quickly identify the product and to differentiate it from competing products;

  • through the packaging and labelling, it conveys information: brand, mandatory legal notices, practical guidance specifying the composition, quantities, precautions or use suggestions and modes of use, the guarantees of quality or the deadline for sale for perishable products. If the dimensions allow, it is best to make the message appear in several languages;
  • through its graphics, its colours, illustrations, shape and the material used, it conveys a product image and company image and thus influences consumer perception of the product and its positioning.

  • Packaging is often the only link between the producer and the consumer, it should give a good image of the product and company and be consistent with the business strategy of the latter;
  • Product Promotion: Effective packaging affects the company's brand image and contributes to the renewal of orders.
  • Commercial aspects: The packaging surface condition should serve as commercial support allowing the identification of the product and a variety of information such as brand, weight, name of manufacturer, country of origin, the instructions security, user manual, graphical representations, which must be legible and in accordance with current standards in the host country.
  • Ease of use: Packaging must allow easy opening, keep a good cohesion of the products when opened, and not generate risks at the opening. It must also be easy to handle (transport, handling, storage).
  • Recycling: The advantage of recycling is not only environmentally friendly, but also​ economic The environment-packaging synergy has become a topical subject. A package that can not be reused or recycled should, to the extent possible, be removable without difficulty.

 

B.  Labelling

 

  1. Labeling functions

 

The label has three main functions: :

  • provide basic product information (including common name, list of ingredients, the net quantity, durable life date, grade / quality, country of origin and the name and address of the manufacturer, the distributor or importer);

  •  provide information on the health and nutritional aspects of the product including instructions on storage and handling, nutritional profile specifying for example the amount of fat, protein, carbohydrates, vitamins and minerals per serving ( in the table of nutritional value), and information specifically aimed at consumers who follow special diets;

  • as a tool for marketing, promoting and advertising to increase sales of the product by means of vignettes, promotional information and claims such as "low fat," "cholesterol free", "high fibre "," Product of Canada "," natural "," organic, "" no preservatives ", etc.

 

 Just like packaging, labelling must adapt to cultural habits, languages ​​and local specificities in terms of graphics, colours, font sizes and symbols used.

You must also comply with the labeling legislation in force in the target market or your product will not be marketable

  

  1. The type of labeling best suited to export

 

The exporting company has to design the labelling to accompany the product. It may be a simple sheet attached to the packaging or sophisticated graphics. Appropriate labelling will identify the product, its features and how to use it. Regulations exist today in terms of labelling information, including in the food sector.

Every convoy shall be carefully marked so that the goods arrive well to its destination.

 A good marking shall be legible, indelible, conspicuous, consistent with the regulations of the country of destination and discreet about the content of the package.

Some simple rules are the subject of an ISO recommendation. For example, for shipments by sea, the final destination is indicated, the port landing, the recipient, the serial number of the shipment, the parcel number in theset. The embarkation port and the sender is optional.

To limit the risk of error and confusion, to ensure a good relationship between producers and distributors and finally to reassure customers about the origin of products, companies codify their products.

 

GS1[1] (formerly GENCOD) offers a wide range of standards that are used in total by more than 20 industries in 150 countries with a bar code. Real management tool at the service of reliability and efficiency, the bar code based on a simple operation, clear and standardized.

The codes to GS. standardized bars are the EAN / UPC, ITF-14, the GS1-128 (formerly UCC / EAN-128), the GS. DataBar (RSS native of the Reduced Space Symbology), the Data Matrix and composite symbologies. 



 

 

[1] For more information, see website  www.gs1.fr  (link is external)

 

UNDERSTANDING FOREIGN TRADE
EXPORTER'S MANUAL

 

THEME: Export Financing
 
 
1)    Export Financing methods
 

Before requesting a loan to finance export operations, you must first determine funding needs to be covered, distinguishing financing needs specific to a particular transaction from those required to maintain business operations .

It is therefore essential to examine certain aspects of the financing of short-term realizable assets. For this, the exporter must establish the balance of expenses and weekly earnings and deduct the monthly statement of gross expected cash flow.

Then, exporting firms can determine if their financing needs are going to be short-term and medium and long term.

 · Short-term financing: This instrument is used to finance working capital requirements needed to buy raw materials and pay the wages, salaries and overheads until the end of the production operation. It also serves to cover the debts, interest and finance short-term loans. The analysis of the production cycle, from the purchase of raw materials to delivery of finished products, allows to determine the amount and timing of the loan. Prompt payment by the buyer allows to reduce the use of this type of financing.

 · Medium and long-term financing: Medium and long term loans are

normally contracted for the acquisition of fixed assets such as new buildings, new machinery and equipment and for the modernization of the company's equipment.

The exporter can obtain long term funds by issuing common shares, preferred shares, through the issuance of bonds and notes or bank loans. This financing can be made on the basis of equity, term loans or a combination of both.

It is important to note that the more the equity funding is important (compared with debt financing), the lower the financial risk for the company. On the other hand, limit debt to a level determined not to weaken the financial position of the entity.

 
 
 
2) How to choose the proper funding source?
 

WAEMU banking services and CEMAC banking services are constituted of custodian banks, development banks which have the mission of financing import-export business. The credits are short-term and interest rates vary by region.

Central banks in both regions, the BCEAO and BEAC  each guard their area for the proper functioning of the banking and financial system.

The choice of the finance bank for commercial operations depends on the specific needs of their customers, the size of the company and the warranty that can be brought.

Exporters can now turn to traditional financial institutions as well as specialized financial institutions capable of offering them a financial solution tailored to their needs and characteristics.

Below is a description of the main sources of funding Exports:

  ·    Commercial banks generally specialize in collecting deposits and granting short-term loans to individuals and industry. It may be that small companies and recent enterprises face difficulties in time to deal with these banks, as their transactions are small and guarantees not sufficient. The advantage of the commercial banks is that they belong to a global network and they offer a wide selection of services to exporters. However, small commercial banks can not be known abroad and can therefore not be considered sufficiently creditworthy for operations abroad.

 ·     Development banks: The role of development banks is to provide medium and long-term funding to encourage business development in the sectors of industry and agriculture. Their aim is more to grant loans for the construction or extension of development projects than profit. Many development banks, mainly in Africa and Asia are beginning to finance trade operations.

 ·     The guarantee institutions and the export credit insurance: the leading role of these institutions is issuing insurance policies to protect exporters default risk of the buyer. These guarantees can then be submitted as collateral to banks to ensure the services provided to the exporter.

 ·     Specialized government agencies or professional associations:

Most of the multilateral financial institutions and bilateral donors directly fund public institutions in developing countries, which in turn provide funds to local companies to finance their export projects.

These loans granted by international or bilateral organizations such as the World Bank, are usually granted at favourable terms.
 
 
 
3) The payment methods available to the exporte

 

The main risk inherent in the export trade is the default, that is to say, the buyer may refuse to pay or take delivery of the goods.

The exporter must therefore ensure that the payment terms

are clearly defined in the contract.

There are various contractual provisions to guarantee

payments: 

·    The advance payment: The safest policy is to require the buyer payment before shipping the goods, but this practice is not very commercial and the buyer runs the risk of non-performance, that is to say, not be delivered. By learning more about themselves, the two parties may agree to a partial advance payment of up to 25% of the transaction amount.

·    The account opened: If the buyer and seller have excellent relations, they can trade through an open account. With this arrangement, the goods together with the detailed invoice is sent to the buyer. They make direct payment. This payment method is rarely used by exporters in developing countries.

·    Credit "stand-by" If the buyer and seller have a good relationship but they do not justify the use of an account, the exporter may request a letter of credit "stand-by" to the bank of the importer. By this means the bank guarantees payment if the importer does not directly do so.

·    The letter of credit: An irrevocable and confirmed letter of credit is considered one of the safest means of payment. The advantage for the exporter is being paid to the bank by presenting the necessary documents. This payment can be relatively expensive due to bank commissions. The bank makes the payment if the documents meet the credit requirements.

·    Documentary collection: This term payment does not guarantee the same protection as the letter of credit but it is less expensive. It requires the seller to ship the merchandise and sends the ownership documents through his bank to the buyer's bank. The buyer may get these documents against payment (this is a transaction in cash against documents). The risk for the seller is that the importer may refuse to take delivery of the goods

 

4) Currency risks incurred by the exporter
 
 

The companies face the risk as they carry out export operations and imports invoiced in a foreign currency.

 To the extent that exchange rates fluctuate, these fluctuations can cause gains or very significant losses.

 For an exporter, there is a currency risk when the price of the currency in which the debt is denominated fall / increases between the date of signing the commercial contract and the date of payment.

 In addition, a company that is bidding for a tender established in a foreign currency is then exposed to a decline of the currency during  the tender period. Moreover, uncertainty as to the outcome of the bid makes the risk very random.

 Therefore, currency risk management has as a goal to minimize, to the lesser cost, the losses which may affect, due to currency rate variations, income and business engagements established in foreign currencies.

 
5) How to manage exchange risks?
 
 

·       The internal hedge management method

 
 

- Professional foreign currency account: The company with foreign exchange resources has a professional open foreign currency account opened which will be credited with 40% of its export earnings. This account allows therefore to cover the commitments made by the company in the relevant currency and guard well against currency risk.

- The leads and lags is a method of modifying a on a case by case basis, accelerating or delaying them, the import and export settlement period to match them to the date of maturity.

The user of leads and lags must consider and compare the expected exchange gain induced by changes in regulations and delays incurred by the creditor or the debtor.

 

·       External methods based on the use of banks

 

The interbank foreign exchange market is the best place to hedge against currency risk. It provides certain products, the most used are: foreign currency borrowings, forward hedges and currency options.

 - Foreign currency borrowing: it is a technique of trade finance, but it can also be used as a method of protection against currency risk.

 To hedge against currency risk through a currency loan, the exporter borrows currency amount equal to the debt it has on its foreign customer. The currency in which the loan is made is identical to that of the debt. The period of advance corresponds to the maturity of the obligation of the importer. Under these conditions a rise or fall of the currency leaves the exporter in the most perfect indifference.

 - The forward cover: The exporter who fears a fall in the currency in the future sells his claim and determines, in this way, precisely the sum in dinars, he will receive later. Exporters of goods can sell forward the product in exchange for their exports for a maximum of 9 months.

 Service providers can also sell forward the product in exchange for services rendered to their non-resident customers for a period corresponding to that of the contract within 1. months and not exceeding 30 days from the birth of the claim.

 - Stock options used to hedge the currency risk related items for imports from abroad by buying a currency at a course in advance.

The call option gives the purchaser the right (not the obligation) to buy a certain amount of foreign currency at a given date and a price set in advance.

 
6) How to assess the creditworthiness of the foreign buyer?
 

Before running an export order on behalf of a new client, the exporting firm should carefully consider the credibility and reputation of potential buyers.

The best source of information regarding the solvency of potential customers is a recent copy of the audited financial statements of profit and loss account and balance sheet, possibly with forecasts for the next six months.

It is perfectly legitimate that the exporter request the financial statements of the foreign buyer, which in principle should expect this kind of query. Buyers should understand that if they wanted to borrow the same amount to their bank, they should provide the same information.

It is important to always check the authenticity of statements and references of the auditor, because sometimes forged documents are submitted.

This information can be obtained by the bank of the exporter from that of the purchaser or any other local correspondent bank. Many banking institutions subscribe to sources of financial information, can provide the financial and stock market information on businesses worldwide. These sources include Dun & Bradstreet, Extel, Reuters, etc.

Such information is used to reassure the exporter of the creditworthiness of the foreign buyer, but does not in any way constitute a guarantee of payment. The exporter must try to get the commitment of the buyer's bank to guarantee payment if the buyer is unable to meet its obligations.

 
 
 
UNDERSTANDING FOREIGN TRADE

 

EXPORTER'S MANUAL

 

THEME: SUPPLY CHAIN ​​MANAGEMENT: TRANSPORT
 
 
 
A.   Definition
 

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.

  •    Safety: Ensure security of exports. The importance of safety criterion is related to the type of goods to be delivered. The goods with high added value sell better if safe and prompt delivery is guaranteed. Safety and speed are then more critical elements that the price of products.

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.

 These are:
 
  • Ship transport

  • road transport

  • Air transport

  • Rail Transport

  • Inland navigation

  • Postal transport

 
Mode of transportation Features and Technical specifications Advantages Disadvantages
Shipping - Diversity and Adaptation of different types of vessels (container, road ships, multi-purpose and specialized)

- Very high use of the container as (time savings and safety), reduces the cost of handling and insurance..
- Interesting Freight rates for some destinations

- Possibility of storage in port areas

- Ability to serve the world 
- Quite a long transport time
- Port congestion in certain areas

- Some lines are not containerized

- Bulk breaking is source of damage

- Higher insurance and packaging costs

Air transport - Mixed devices and all-cargo

- ULD loading (igloos, pallets, containers) ⇥ Speed, safety of the goods
- Cheap packaging

- Lower financial and storage costs 

 

- High Price limiting the sending of dense cargo or low value cargo

- Limited capacity
- Prohibited for certain hazardous products
- Bulk breaking
Road transport - Ability to use containerization and possibility of combining rail and road  - Door to door service without bulk breaking

- Relatively quick delivery time 
- Safety and delays vary by countries and weather
- Used much in continental Europe for medium distances
Rail transport 

Shipping by wagon-load between. and 60 tons and possibility of whole trains for higher tonnages (numerous vehicles, aggregates, etc.)


- Diversity of available materials and swap bodies uses
- Development of combined transport and possibility of door to door

- Traffic fluidity and respecting deadlines

- Adaptation to long distances and large tonnages
- Not suitable for short distances
- Limited rail network
- Requires a pre- and post - transit outside of the combined transport

- Bulk breaking
River transport  - Use of natural waterways and canals   - Good carrying capacity, 300-2 500 tonnes according to convoys

- Lower cost 
- Slow and thus immobilizing the goods during transport

- Cost of pre- and post-routing

- Bulk breaking
Services postaux - Shipping worldwide of parcels and goods in small quantities

- Simplicity and diversity of services 
- Simplified Customs formalities

- Possibility to use guaranteed deadlines formulas
- Priority shipments and services varying according to destination

- Use limited to small-shipments
 
 
 
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:

  •  taking inventory of handling equipment and storage areas at its disposal;
  • taking inventory of accessible transportation: proximity of a train station, bus station, an airport, a waterway, of warehouses, ... .

Logically, companies are often faced with the choice between:

 
  • Sea / air for transcontinental transport;
  • Rail / road for the continental inland transport;
  • Conventional / multimodal according to criteria such as the nature of the goods, the different types of transport and related services, etc.
  • The solution to the objectives of the exporter  

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.
 
 
UNDERSTANDING FOREIGN
TRADEEXPORTER'S MANUAL

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
EXPORTER'S MANUAL

 

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:

  • extend or make a market study;

  • follow the evolution of technology;

  • conduct a study examining the competitive offers from competitors through the collection of technical and sales literature (catalogue, argument on the product, company profiles, sales conditions);

    produce a product testing;

  • introduce new products;

  • visualize the global supply of a sector in one place and in a very short time, allowing to optimize the useful contacts;

  • contact your current customers whose comments are an invaluable source of information and loyalty;

  • make yourself known to potential buyers and influence them to buy the product by showing its technical characteristics and its distinctive advantages. Sale and registration of orders remains the ultimate goal of any company involved in a lounge;

  • meet and select agents, licensees, distributors and potential partners to form a distribution network in foreign countries;

  • meet the press and local personalities. Enjoy your participation in an exhibition or fair to implement a public relations exercise.

 

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

  2. Organization of the event

  3. Price

 

           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: 

  • the reliability and reputation of the organizers;

  • the theme of the show. International fairs can be general (in this case they cover several categories of products) or specialized (they then focus on one industry's products). If the company sells, for example, an industrial product, it is best to target a specialized sectoral exhibition in a particular industry rather than a general exhibition;

  • competitors present at the exhibition;

  • the number and profile of visitors. It is better to focus on the quality of the visitors (that they correspond to the company's target) than their number.

 

              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:

 

Time

Tasks

Comments

 12 months

Booth rental

The more the stand will be reserved in advance, the more the company will benefit from a strategic location.

Booking Advertising in the Exhibitor Kit

 11 months

Selection of products to be exhibited

The products will be selected according to the target audience.

 10 mois

Study of the booth decoration

Booking hotel

The decoration should be investigated rigorously, because it influences the passage of visitors.

You have to book the hotel in advance as during exhibitions, they are usually full.

 9 months

Booth design

Preparation of the material to exhibit

The period of the stand design varies according to the type of stand. A personalized stand requires a longer period of time than a stand delivered by the organizer.

One must think of a packaging adapted to the mode of transportation.

 8 months

Reservation of water connections, electricity (telephone, fax)

 

 7 months

Promotional policy elaboration

The animation of the stand highlights the impact of participation. Some stands stand out from others with this criterion.

 6 months

Selection of men and hostesses

 

Choose professionals.

 

 5 months

Staff training

The welcome must be impeccable, which is why pre-show training is often helpful.

 4 months

-Verification of the equipment

-Booking Transport equipment

-Preparation of business documentation (business profile, catalogue)

-Booking Advertising in the Exhibitor's catalogue

To transport the goods, it is advisable to use a freight forwarder with expertise in exhibitions.

 3 months

-Airplane Ticket reservation

-Passport verification

-Preparations of invitation cards

Invitations are the best ways to ensure visitors and customer loyalty.

 2 months

-Apply for exhibition insurance

-Applying for a visa (if required)

-Make the required vaccinations

 

 1 month

Dispatch of invitations

 

 Last days

-Shipping Products

-Staff departure

-Setting up the stand

-Products and security verification

The shipping period of products can be longer if it is a distant destination and setting up the stand depends on the opening of the exhibition hall to exhibitors.

Generally, delivery of modular stands by the organizer is on d-. and the opening of the hall for assembly of custom stands is done on d- 3 or -4

 

Source: Interex
 

At the end of the event the company must

  • follow up on contacts made at the exhibition via a mailing sent in the week. This will be the opportunity to thank the visitors to their interest in the company and send additional documentation;

  • start negotiations with new clients;

  • elaborating a summary of the results in terms of contacts and sales. 

    3.    Price

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. 

Exhibition fees

 - Booth rental

 - Exhibitor's catalogue inscription fee

 - Registration fee and badges

Layout and arrangement expenses

- The walls, furniture, decoration

- The lighting, water connection

- Assembling and dismantling,

- The telephone, fax, etc.

- Stand cleaning fee

Communication expenses

- Free invitations

- Mailings

- Brochures, leaflets, flyers

- The samples and promotional materials

- Receptions

Product-related expenses

 - The packaging

 - Transportation

 - The insurance

Personnel costs

 - Transportation

 - Accomodation

 - The food

 - Interpreters

 

Source : Interex

 

This list is not exhaustive.

  • In Insurance matters, the company may need to subscribe to an insurance in order to protect against partial or total failure of its participation in a fair or a show.

 

As well as exporters can consult other national and international sites that give information on the various trade events

 

Foreign sites

  • L´Union des foires internationales (UFI) has a national catalog of exhibitions associations in the world;;

  • ExpoBase - This multilingual portal of the business exhibitions and travel industry contains a database of international exhibitions of more than 27 000 references (by country, by sector of activity and date);

  • Elotel - European portal of professional or public events (fairs and exhibitions, trade shows and all audiences, conferences, symposiums, meetings, conferences and seminars);

  • Euroexpo - Web Directories of fair organizers in Europe, supplemented by a list of useful sites in the area of ​​international trade fairs;

  • ExpoWorld.net - specialized directory in the field of trade events worldwide. It contains more than 500 Internet resources (directories and search engines) devoted to this area;

  • Exhibitions´ Round the World - Directory of global trade events;

  • EXPOguide - Guide to international exhibitions and trade fairs;

  • Europages - The European Business Directory - This directory includes more than 500,000 companies from different sectors of activity in thirty mainly European countries. In the business trips - exhibitions section, you will find contact information for professionals in the sector;

  • Yahoo -Conventions_and_Trade_Shows - Part of the Yahoo directory dedicated to fairs and exhibitions;

  • Trade Show Central allows to identify trade events  (fairs, shows, conferences, ...) depending on the country of destination or activity sector. In english.

 

4.    Follow-up

 

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:

  • market size

  • segmentation

  • sociodemographic and socioeconomic profiles

  • development trends of demand for the product

  • buying process (criteria, frequency, volume, etc.)

  • It leads to the identification of opportunities to exploit on selected markets and threats to avoid.

  • Elle aboutit à la détermination des opportunités à exploiter sur les marchés choisis et les menaces à éviter.

 

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:

  •  market share projected percentage
  •  projected sales in monetary units
  •  expected profit margin on each product-market couple

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:

  • the nature of the product;

  • the length of the desired channel;

  • production capacity used;

  • Customs duties

  • non-tariff barriers;

  • tariff barriers;

  • knowledge of the target market and language;

  • Company's financial resources;

  • the degree of protection of intellectual property rights;

  • how customers perceive foreign companies

 

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:

  •  Marketing and sales: the relevance of the policies and rules of application of the export plan or import regarding the product aspect (adaptation, certification ...), price (penetration ...), advertising and promote (fair, mission, sales force), distribution and logistics (choice of location and means of delivery, and product transportation)
  • Human Resources: identify policies and mechanisms for human resources dimension of the project ie the project team, training, evaluation, compensation
  • Finances: determine the measures considered to enhance the efficiency of financial transactions (calculation of export prices, international claims management, management of foreign exchange, financing);
  • Operations: it relates to the production action plan (production capacity, supplies, technical equipment).

 

5. Risks:

 

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.

 

Risk or threat

Mean or mechanism

Failure to pay

Insurance account or credit check

Economic and monetary conditions

Forward exchange contracts, options or currency swap or monitoring system and control

Political situation

Political risks insurance or monitoring system and control

Increased competition

System monitoring and control

Legal and contractual conflict situation

Recourse to a lawyer or jurist, or control system

 

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:

  • marketing (collection systems and analysis system of market and environment information)

  • sales force (feedback of information from the sales team: representatives, agents and distributors)

  • customer relationship management systems

  • Dashboards (key indicators)

 

UNDERSTANDING FOREIGN TRADE
EXPORTER'S MANUAL

 

Major websites on international trade



1 - http://www.wto.org  

2 - http://www.cnuced.org  

3 - http://exporthelp.europa.eu  

4 - http://trade.ec.europa.eu

5 - http://www.asepex.sn