International Business FAQs
Before you venture overseas to import or export, consult this list of international business FAQs for advice and resources.
How do I find business partners in other countries?
Contact your state's Commerce Department, which should have a department that offers import/export assistance. You can also use a sourcing agent: Sourcing agents can not only find an overseas manufacturer to make your product, but they usually have overseas offices to give you easy access to the foreign manufacturer.
You should also examine industry research on suppliers through organizations like the Federation of International Trade Associations (FITA) and trade groups specific to your industry. Also look into U.S. government assistance programs. FITA has comprehensive business directories on many source countries, while the Export-Import Bank now offers larger capital loans for small global traders. The U.S. Commercial Service's Gold Key Matching Service introduces entrepreneurs to U.S. embassy officials overseas, who then introduce Americans to local suppliers.
You can also attend major industry trade shows, which are attended by global representatives on the hunt for U.S. companies that want their products manufactured overseas. To find a trade show, log on to www.tsnn.com or www.expoguide.com .
Federal agencies offer links to reputable businesses or at least let you know the reputations of the ones you intend to partner with. It's also important to have an attorney draw up rock-solid contracts, have at least one backup supplier, and, above all, trust your instincts. There's no substitute for meeting potential partners in person or for checking their bank and customer references. And until you trust the potential partner's company completely, a letter of credit provides secure transactions.
What government resources are available for doing business internationally?
Your first step should be to contact the Trade Information Center (TIC) at the U.S. Department of Commerce, a comprehensive resource on all federal government export assistance programs. Call TIC's toll-free number, (800) USA-TRADE, to speak to an international trade specialist and get advice on how to locate and use government programs, sources of general market information, and basic export counseling. The TIC's website has FAQs concerning international trade and information on trade missions to overseas markets where you can meet with potential distributors and buyers. You can also request a package of information that includes a list of publications to guide you through export transactions, trade leads and information on export financing, and supply sources for market reports and country information.
You can also sign up for export training at Export Small Business Development Centers, which offer counseling in export market strategies and hands-on training programs. Track down a program near you by calling your local SBDC and asking to speak with an export specialist.
New-to-export firms may also qualify to enroll in the six-month Market Entry program, which provides training, consultation and support. Eighteen centers nationwide offer the program on a rotating basis. For more information on the program qualifications, call the U.S. Export Assistance Centers at (800) USA-TRADE.
The cost for both types of training programs can range from free or a nominal fee, to a few hundred dollars. You can also tag along on a trade mission. Government agencies, nonprofit organizations and some larger companies regularly set up trade missions to help small businesses penetrate new markets. Trade mission lists and information can be found at a local district export council, chambers of commerce or state export assistance offices. Directories of overseas buyers can be found at www.export.gov and www.buyusa.com , two websites sponsored by the U.S. Commerce Department. Another good site is the U.S. Export Institute's site . You can also find partners in a particular country by calling or e-mailing the U.S. Embassy there. They can provide you with lists of local companies that have bulk-purchased the type of things you sell. A list of U.S. Embassies can be found at www.embassyworld.com .
How can I make sure I'm following international trade laws?
It's important to make sure that you legally can export your products overseas without a license. While most goods do not need an export license under the federal Export Administration Act, licenses are generally required for high-tech or strategic goods, or goods shipped to certain countries (such as Iran or Libya) where national security or foreign policy controls are important. Even if you're selling goods to a friendly country, you may have to take steps to prevent your overseas buyer from reselling the goods to a restricted country.
If there is even a remote possibility that your products or software may have military applications, you should consult with a lawyer specializing in international trade matters before exporting anywhere.
In many countries, kickbacks and bribes have long been an expected cost of doing business. But the Foreign Corrupt Practice Act (FCPA), enacted by Congress in 1977, prohibits bribery of officials in other countries. It's illegal to make payments, promises or offers of anything of value to foreign officials to obtain or retain business, or to get an improper advantage. It's also illegal to make such payments to a third party (say, a government official's brother), knowing he's just an intermediary.
How do I find product importers?
If you can find foreign distributors for your product, you'll be able to simply sell them your products and let them worry about reselling them at a profit in their domestic markets. Distributors are nice because they can offer foreign customers top-notch service and are easier for you to deal with because they typically buy enough of your product to build up an inventory.
You may be able to find a foreign distributor by simply looking around your home city or state for a foreign company with a U.S. representative. Trade groups, foreign chambers of commerce in the United States, and branches of American chambers of commerce in foreign countries are all good places to start your search for a foreign distributor.
International business consultants can provide valuable help when you are first trying to evaluate a foreign distributor. The best distributor will be one with a track record selling to the companies or consumers who fit into your product's target markets. Unless you're fluent in the language of the country you're selling to, you should choose a distributor who can speak your language well. You'll want prompt, competent responses to your requests for information or service. Make sure your phone calls, faxes and e-mails are answered in a timely, satisfactory fashion. Meet your prospects in person, and, as always, get and check references.
What are the risks of hiring foreign manufacturer for my product?
One of the big risks in dealing with an overseas manufacturer is you have to provide an irrevocable letter of credit to the manufacturer. The letter lets your bank transfer money to the manufacturer when the product ships.
But what happens if the product ships too early, ships too late or ships before you have a chance to approve the production run? The letter of credit may transfer your money anyway. One way to minimize this risk is to arrange for shipment through an international freight forwarder. The forwarder can contact you for authorization when the product is ready, and you can refuse delivery if the order isn't correct. Forwarders also help you with a letter of credit, customs and delivery information. To find a freight forwarder, check the Yellow Pages of large cities.