Creating an Export Strategy is a process that takes time and effort.
Is it necessary for me to have a license?
This is among the most frequently asked topics we receive at Barai Overseas from our US Clients. Even though the commodities are subject to US government export control requirements, 95 % of all things exported from the US to a foreign consumer do not require an export license, therefore the answer is typically "no." These rules influence whether or not you may sell your goods to an international customer, as well as which countries and buyers you can sell it to. However, just because your product is one of the 95% that doesn't need a license doesn't imply you may sell it to anybody, everywhere.
Export Administration and Bureau of Industry and Security regulations
Dual-use items are those that are approved by the Bureau of Industry and Security of the United States Department of Commerce that have both commercial and military or nuclear proliferation uses. The Export Administration Regulations (EAR), which are also available on the BIS website, cover these categories of items.
Although dual-use export licenses are required for a small number of items, they are required in certain situations involving national security, foreign policy, short supply, nuclear nonproliferation, missile technology, chemical and biological weapons, regional stability, crime control, or terrorism. The technical qualities of an object, as well as its destination, end-use and end-user, and other end-user actions, decide whether a license is necessary. Make sure you grasp both the notion of dual-use and fundamental export-control requirements before delivering your goods.
Dual-use goods might be difficult to categorize at times. Rifle scopes, for example, are a restricted item that may require a license to export. Visit bis.doc.gov to learn more about the EAR, which includes videos that show how to categorize your items with an Export Control Classification Number (ECCN), if one is required.
The codes used to categories the items listed in the EAR are known as ECCNs. Although the principle of categorization is similar to that of the Harmonized Technique (HS) and Schedule B numbers, the system employed is somewhat different. Consider appointing one person in your firm as the compliance officer if you only export a limited number of items to a small number of countries and no export license is required. Only five items are required in your export compliance plan:
1. Classify your products before starting to export them.
2. Know the embargoed countries to which you cannot ship or sell.
3. Check the denied parties lists at bis.doc.gov for the individuals and institutions
to which you cannot sell.
4. Keep records of the transactions (copies of the commercial invoices).
5. Include the Destination Control Statement on all commercial invoices, including
ones for domestic customers or trading companies in case they sell your product
to an international customer.
You should consider producing a documented compliance strategy if you have a catalog of dozens or hundreds of stock-keeping units that you wish to sell internationally. In addition to studying the online BIS videos and publications, the person in charge of your company's plan should consider attending specific EAR and export-control courses. For information on where to get training, go to the BIS website or contact your local US Commercial Service office. You may also contact BIS for help with the plan's development and a review of the final product.
Planning
Every dual-use item requires its own ECCN. Ask your suppliers if they can provide the necessary ECCNs when adding a product to your inventory or reviewing your current product line; create an ECCN field in your inventory-management system, and add a related field that lists the countries to which export of that product is prohibited by the EAR when adding a product to your inventory or reviewing your current product line. Work closely with your suppliers to learn how they determine ECCNs if you're getting them from them. Because the ECCN and any license numbers you get must appear on export documents like the Commercial Invoice and the Automated Export System file, you should have easy access to this information in your inventory management system. As previously stated, all dual-use goods require a unique ECCN. "EAR99" is the classification for items that are not listed in the EAR under a specific ECCN. You may be required to put "EAR99 NLR," which stands for "No License Required," on USPS paperwork and online systems of major freight companies. The "ECCN Questions and Answers" section of bis.doc.gov has further information about EAR99. Establishing a company-wide regulation emphasizing the relevance of ECCNs and the accompanying HS Numbers is a smart idea. If a product doesn't have an ECCN or HS number listed in the inventory management system, it can't be shipped internationally. Adapt your inventory-management software to indicate questionable orders if at all feasible.
Regulations on International Arms Trade
The sale of military-related goods is governed by the International Traffic in Arms Regulations (ITAR). If you manufacture or sell these items, you should get familiar with the ITAR. PMddtc.state.gov has further information.
Begin by checking if your export items (hardware, technical data, and/or defense services) are included on the US Munitions List (USML), which may be found in Part 121 of the ITAR. If that's the case, visit the ITAR website for more information, or contact your local US Commercial Service office Exporting things from the USML without the right authorization has major legal ramifications. Consult your local US Commercial Service office if you're unsure whether your items are subject to the ITAR. Persons or Entities Who Have Been Refused
BIS, the US Treasury's Office of Foreign Assets Control (OFAC), and the Bureau of Industry all manage and implement economic and trade sanctions on foreign countries, regimes, businesses. Almost all commercial dealings with any OFAC or BIS sanctioned entity are forbidden, regardless of the product; a few exceptions exist in special circumstances, but they do not apply to the vast majority of transactions. Because these restrictions apply to all products, exporters must be aware of the people, organizations, and nations on these lists. If you want assistance with these responsibilities, you may employ a third-party organization to execute these inspections in real time via data transfers with your network. Search the Internet for "export-compliance firms" to locate such businesses. You may also buy software to assist you in staying compliant. If you utilize freight forwarders, they may identify potentially problematic transactions, but you are ultimately liable. Companies with a modest quantity of exportable items can appoint one person to oversee compliance with export requirements.
Identifying the Export Potential of Your Products
After you've decided whether or not you need an export license to sell your goods, and you've discovered that North Korea isn't one of the markets to explore, assess the export potential of your product or service. There are various techniques to assess your products and services' export potential in overseas markets. Examining your items' domestic sales is the most usual strategy. If you wish to be a manufacturer's agent or a wholesaler in the United States, you'll need to be able to analyze domestic sales. If you're starting a business but haven't sold anything yet, you'll have a solid idea of your future potential. Examining the distinctive or crucial qualities of your product is another technique to analyze your company's export potential. If such traits are difficult to replicate in other countries, your product is likely to be successful there. A one-of-a-kind product may have limited competition, resulting in great demand.
Don't be disheartened if your product isn't one-of-a-kind. Many products and services, including those discussed in this blog, compete in their intended international markets.
Businesses in the United States have a variety of options for competing in overseas markets, including:
• How the product is positioned in a specific market
• The advantage of the “Made in the USA” brand
• Help from the GEE, including government export promotion services
• Excellent customer service or some other competitive advantage that has little to do with
what is being sold but how it’s sold
• Free trade agreements or foreign currency exchange fluctuations that cause competitors’
products to be more expensive
Examining Your Business's Export Readiness
Companies that are export-ready have specific characteristics that boost the chance of their exporting endeavors being successful. Answering these key questions about how exporting will help your organization achieve its objectives will help you establish its export readiness:
• What do you want to achieve from exporting for your company?
• Is exporting in line with the company's other objectives?
• How will your company's essential resources, such as management and employees, manufacturing capacity, and funding, be impacted by exporting, and how will these needs be met?
• Are the anticipated gains worth the expenditures, or would firm resources be better spent expanding domestic business?
Take the export readiness assessment, which can be found at export.gov/begin/assessment.asp, for a more in-depth look at whether your organization is ready to export. You'll be asked to think about your company's existing operations, attitudes, and goods, among other things.
Examining some of the motivational and organizational elements that led to your company's choice to export will help you make a more theoretical judgment. These considerations will assist you in determining whether or not your organization and product are ready to export.
Among the motivating considerations are:
• Expansion on a long-term basis.
Because developing an exporting strategy takes time, it's crucial to focus on long-term growth rather than looking for quick wins.
• A boost in competitiveness.
Your organization may learn about diverse ways of doing business by selling globally.
• Making use of one-of-a-kind technology and knowledge.
You'll have a competitive advantage in the worldwide marketplace if your product quality or knowledge is greater.
• A higher rate of return on investment.
Exporting may provide your organization with a variety of advantages, including increased client networks and exposure to new ideas and technologies.
• Expanded capacities
You'll improve your product and service development, leadership talents, and customer and supplier collaboration.
The following are some organizational elements to consider:
• Management's dedication.
The number one deciding element of export success is management's total support.
• Financial assistance.
Management must be willing to devote appropriate time, energy, and financial resources to exporting.
• Personal commitment and competence.
Having foreign experience on staff or having workers learn the language and culture of your target market will help you break into the international market.
• Functionality of the product
Your firm must have the space and equipment necessary to manufacture for the various nations to which you are exporting (each with its own set of product standards and laws).
• The company's exporting objectives.
Consider if the predicted advantages outweigh the costs, whatever your purpose.
Is your product export-ready? Consider the following extra considerations when determining export readiness:
• Unique selling propositions.
If your product is a hit in your home country, the next step is to figure out why it sells or has sold so well there, keeping in mind that conditions (socially, culturally, economically, politically, and ecologically) may be slightly to considerably different.
• Adaptations.
You may offer your product to worldwide markets without making any changes as long as it complies with the individual nations' norms and regulations. Government rules in certain nations impose stringent testing, safety, quality, and technical conformance requirements. Suppliers may need to change colors, sizes, and packaging to fit local conditions and customer preferences, depending on the product and region.
• Licensing of products
Before exporting, several product classes require specific permission from the US Department of Commerce, and some of those items require export licenses.
• Compulsory training.
Products that need training create a bigger burden on your organization, distributor, or agent, and you must decide how to support that training.
? Customer care after the transaction.
Products that require a lot of after-sales servicing should be handled by a distributor or agent who is well-equipped to do so. Another alternative is to provide the means for the product to be returned to you for repair and replacement.
• Uniqueness of the product.
Products with distinctive characteristics have a competitive edge and are more well-received in international markets. Patents, exceptional quality, cutting-edge technology, and flexibility are just a few of the distinctive aspects.
Contact your local U.S. Commercial Service foreign trade specialist for a more comprehensive list of considerations and questions to consider.
Instead of filling the occasional order from an overseas buyer, our website www.exportimport.guru will teach you how to export strategically. Selling overseas using your own website or a third-party e-commerce site might be a lucrative enterprise. Passive or reactive exporting may be the prevalent approach among small and medium-sized businesses in the United States. This way of exporting has nothing wrong with it, and it typically does not need extensive preparation or in-depth consideration of reasons or capabilities. However, a strategic strategy is required to take your company to the next level of performance, expertise, and development. The first stage is to draft an export strategy.
Creating an Export Strategy
The development of wide consensus among key management people on the company's goals, objectives, capabilities, and restrictions is an important initial step in planning. Furthermore, the individuals participating in the exporting process should agree on all components of an export strategy because they will ultimately be accountable for its proper development and execution. Of all, at this point in your business's development, you, a partner, and a few staff may be all you have. The following are the objectives of the export strategy:
• To compile information, restrictions, and objectives
• To write an action statement that incorporates all of those factors. The plan specifies explicit objectives, establishes implementation timelines, and identifies milestones so that the degree of achievement can be monitored and workers may be motivated.
An Example Of An Export Plan's Outline
- Introduction
Lips L'amour is a fantastic lip balm with a touch of wheatgrass and kale that provides optimal lip protection and taste. It's a better-for-you alternative to its mass-market counterparts. They are ready to pursue international sales via an expanded web presence, including direct sales to distributors via popular e-commerce platforms, including one based in China and serving that market. After several years of successful Internet sales to domestic buyers, followed by the creation of a network of domestic distributors in ten states and two Canadian provinces and one based in China and serving that market.
The company is located in Venice, California, adds brand value to the product by linking it with images of youth, bodybuilding, a clean environment, and social concern (They donate 5% of sales to a global charity).
If further detail is needed, include it, but keep it to a few paragraphs.
2. Targets.
- Increase firm revenues by 15% in two years by using third-party e-commerce sites.
- Sell in markets where 97% of purchasers are located outside of the United States.
- Learn from discriminating customers in the new areas where we will sell to improve product lines, marketing, and management.
- Within two years of selling on e-commerce platforms, find one distributor in two new country marketplaces. As needed, add more objectives.
3. Monetary Resources
- A $35,000 annual capital budget will include assistance in locating distributors as well as participation in a government-sponsored trade exhibition or foreign trade mission.
- A three- to five-year minimum commitment to these export channels is required.
- A respectable website that will be further internationalized with the aid of a consultant
- Marketing materials that will be translated
- A part-time employee job.
As needed, add additional resources.
4. Non-financial Assets
- Send Staff to Overseas Trade Fairs for Marketing
- New Staff should be given training and study from Barai Overseas
- One Staff will look into government export aid that is free or low-cost.
As needed, add additional resources.
5. Current Practices and Trends
- Sell goods online and through a network of domestic distributors.
- Receive unsolicited sales from individual buyers on occasion, as well as a few requests from potential distributors from trademap.org
As needed, add more trends and practices.
6. Manufacturing Capacity
- Look into contract manufacturing at a local facility.
Make it unique to your company and products.
7. Markets to be targeted.
- Follow up on any leads produced by our website and e-commerce platforms, as well as look at India, Singapore as a Southeast Asian regional market.
- Use available market information, including research from US government sources, to examine the lip balm markets in India, Singapore, and other countries.
- Examine the consequences of the recession during the last four years, as well as present developments.
- Examine shipments of lip balm from the US to other nations, as well as the average selling price, to identify where the most demand exists and whether our firm is price competitive from trademap.org , macmap.org & several port data websites
- Will include market size, GDP, national debt, and currency reserves, as well as predicted growth and ease of doing business statistics from the World Bank, the International Monetary Fund, and the United Nations.
8. Danger
Nonpayment, products held up by foreign customs, and commodities lost or stolen on transit are the main sources of risk. Non-payment risks are primarily mitigated by US government help in screening prospective purchasers and our initial cash in advance policy, while insurance covers other types of losses.
To avoid customs difficulties, the company should aim to leverage the assistance of government export promotion agencies as it will move closer to securing one or more distributors. It can reduce the danger of customs complications even further by better knowing the shipping and paperwork processes.
Create a risk profile that is unique to your company.
9. Policies on credit.
- Consider and investigate providing terms for sales to distributors
- Become familiar with letters of credit for use with larger orders from distributors
- Inform buyer about policies related to paying duties and taxes Customize for your business and products
- Only opt for irrevocable LC payment terms backed by credit insurance if you are a fresh startups in this industry
10. Return Policies
- You can give a full refund or replacement for missing or damaged items in transit; the policy will be reflected on the website; customize for your products, For example, you may wish to provide free delivery for product repairs, or you may need to locate someone in the market who can fix the goods closer to the consumer. In return policy you can add that return and replacement would be free but the freight cost has to be paid by the buyer, so that it does not create more financial load in your company and can stop fake returns
11. Shipping.
- Startups can primarily ship by air and will select one or more express carriers; You can offer the US Postal Service as a lower-cost option for shipments weighing less than 70 pounds Alternatively if the parcel is big, you may opt for LTL i.e Less trailer loaded (We call it as LCL in India i.e Less Container Loaded).
- For Bulk Shipments FCL or FTL, you can opt for the Shipping Services of 20 FT or 40FT Containers.
You may want to edit this area based on your delivery company preferences.
12. A freight forwarder
At this level of foreign sales development, none are required. If you do need one, create a section and describe what you and your employees will accomplish, as well as what the forwarder will do and how much it will cost. Contact the National Association of Freight Forwarders and Customs Brokers of America for references to freight forwarders in your region if you require one, especially if your first sales volume is high. A forwarder can also assist you with clearing goods at the port of entry. Keep in mind that some of the world's top freight carriers also act as forwarders and customs brokers, providing these services all over the world.
13. Export Permits
For these goods from the United States, none are necessary. You can also visit bis.doc.gov or contact the Bureau of Industry and Security.
14. Certificates of Health
Depending on the destination country, the product may be required to have a health certificate issued by a state or federal government body based on the manufacturer's representation of product contents and/or a physical examination of the manufacturing facilities.
Lip balm is classified as a cosmetic, and the US Food and Drug Administration will give a certificate if you ask for one.
Make whatever changes you want to this area.
15. Language Regulations.
Check to discover if the product packaging must include languages other than English. In the case of consumer items like lip balm, a list of ingredients and "Made in the USA" may be required to be printed in both English and the country's official language. For many non-consumer items, the shipper just has to specify where the product is manufactured on the commercial invoice.
16. Harmonized Code or Export Number for My Product (U.S. Schedule B).
Lip balm has a Schedule B number of 3304.10.000. The first six digits of the Schedule B number, 3304.10, are the Harmonized Code number.
17. Copyright Protection.
You can look into trademark protection on a global scale (see uspto.gov).
18. Documents required to be sent to buyer from US Exporter.
- Invoice
- Packing List
- Certificate of Origin
- Inspection Certificate
- Insurance Certificate
- Bill of Lading or Airway Bill
- + Any Other Documents required by the Buyer / Buyer's Country
- You can Consult your Forwarding Agent to know more regarding it or the Format for the above documents
19. Pricing.
• If a client purchases one or more of our items, you can compute the total landing cost + Profit for them.
If there is a direct purchase from your website, then kindly make it clear on your website that "the client is liable for all relevant customs, taxes, and shipping expenses."
• For bigger shipments, for example, you can compute the cost of delivering one item at 25% per package, which includes trucking, freight forwarding, documentation, banking, and insurance + roughly $8.75 to cover manufacturing, marketing, and profit at a market price of $10 per box, excluding shipping and distributor fees.
You can check the detailed costing sheet on https://www.youtube.com/watch?v=elDz0l-zUJM
Here you may enter your specific pricing strategy and computations.
20. Website Strategies
- Make your site more international by including text on the homepage inviting international visitors.
- On the homepage, provide a currency converter.
- Include wording about duties and taxes, emphasizing that the customer is responsible for paying them.
- Sample tariffs and taxes for a few nations are included. From macmap.org the buyers can check the import duty in their country
- State that all pricing are in US dollars (or Canadian dollars or euros), but allow customers to change their currency using a currency converter link next to each order placing button.
- As new overseas buyer testimonials (and photographs) become available, update the page.
- Include shipping options, including the United States Postal Service as a low-cost alternative.
Include a return policy that is well-written.
Invite potential distributors to contact you.
Think about employing click-through advertisements that are targeted at certain nations and contain specific key terms.
Include if the product qualifies under a current free trade agreement.
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