Get in on the Export Boom Learn how to take the first step into foreign markets by developing an export compliance plan and determining which markets to enter.
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Exports are among the few sectors of the U.S. economy having much success these days. More and more companies, especially small and medium-size businesses, are looking overseas to bolster their bottom line. Whether you're shipping consumer goods, industrial inputs, services, technology or anything else, it's a great time to go global.
Even so, many companies hesitate to take that first step. Foreign markets can seem so, well, foreign. There are a number of challenges, from linguistic and cultural differences to Byzantine regulatory systems.
But getting started and being successful are relatively straightforward. While all the details can't be explored here--and it's critical that you mind the fine print--what follow are two basic steps to conducting business internationally.
First and foremost (assuming you know what you're going to ship), you need a plan--an export compliance plan. The federal government maintains complex rules and restrictions on a wide range of so-called dual-use products, which may primarily be geared toward consumers or manufacturers but can have military applications as well. The government also imposes strict controls on exports, re-exports and transfers of items exclusively designed for the defense sector. Washington is cracking down hard on exports of controlled items that could be diverted to countries or entities of concern, pouring more resources into investigations and imposing civil and criminal penalties. Such penalties include as much as 20 years in jail and fines of up to $250,000 per violation for dual-use goods and $1 million per violation for military items.
An effective export compliance plan reflects a clear understanding of your responsibilities under U.S. export laws and regulations, including classifying your products correctly, knowing who your customers are and complying with any applicable restrictions or prohibitions on where your goods can be sent and what they can be used for. Your plan can help keep you out of the government's crosshairs, and it can be a major factor in mitigating the consequences if you inadvertently break the rules. A good attorney who specializes in export services can be invaluable in preparing and implementing your plan.
The second step is figuring out which markets to enter. This can be a daunting prospect, but the good news is that the Uncle Sam who's so intent on making sure your goods don't end up in the wrong hands also offers a wealth of assistance to hook you up with legitimate buyers. Agencies such as the Department of Commerce and the SBA have offices across the country devoted to helping new exporters find markets and business partners overseas. They also offer detailed, country-specific information on rules, standards, procedures and policies that may apply to your goods. Much of the information is free, but some programs offer more intensive consultations and assistance for a small fee.
One important thing to consider when evaluating your overseas options is how you're going to attract buyers. Your potential customers are focused on money; specifically, how much it's going to cost them to import your products. They're concerned about import duties, taxes and fees. One way to minimize these costs is to take advantage of free-trade agreements. The U.S. has FTAs in effect with 14 countries. Six are pending and there are more on the horizon. By eliminating duties on your exports into these markets, FTAs can give you a leg up on your competition.