A Three-Part Series Covering Tips, Advice and Resources to Help You Turn Your Company Into a Global Presence on the Internet.
The three articles in this series will:
1) Help you weigh the risks of going global and help you identify your global market niches.
2) Help you determine the best way to get your product/service to your foreign buyers.
3) Help you market your product/service to the global market arena.
Entry into the global market can be accomplished in several ways. The first things to consider are the barriers to entry and their associated risks. Conducting business in other parts of the world is quite different than the way we do it here in America.
We need to know what obstacles we are up against if we want to be successful and we need to do our homework to give us the right preparation. This involves quite a bit of research and qualified input from the right sources.
What is the demand for our product or service in other parts of the world? What price structure should be used? How is the currency transferred? Will we even get paid at all? How do I handle tariffs? – These are just the beginning questions that you should ask yourself. Finding the right answers is the trick!
The first place to start is with our own government. The US Small Business Administration is one of the most valuable resources at our disposal. The consulting services provided by their Service Corps of Retired Executives (SCORE) will help you decide if your product or service is ready to compete in a global market.
The SBA also sponsors two programs that are designed to help business owners needing management and export advice. The Small Business Development Centers (SBDC) offer counseling, training and research assistance on all aspects of small business management. The Small Business Institute (SBI) program provides small business owners with intensive management counseling from qualified business students who are supervised by faculty.
The US Department of Commerce (DOC) International Trade Administration (ITA) is a very valuable source of advice and information. ITA specialists can help you determine the best foreign markets for your product or service.
District Export Councils (DEC’s) are a useful ITA sponsored programs with fifty-one districts around the US. The DEC guides, educates, and counsels new and experienced exporters in their individual marketing needs.
The US and Foreign Commercial Service (US&FCS) helps firms compete more effectively in the global marketplace with trade specialists n sixty-nine US cities and in seventy foreign countries.
Port Authorities are a very good resource for export training and foreign-marketing research activities.
In addition to government-sponsored resources, private sector organizations can provide a wealth of invaluable information.
The National Federation of International Trade Associations lists over 150 organizations in the US that help small businesses enter global markets. Many of these associations maintain libraries, databases and established relationships with foreign governments to assist entry into the international trade market.
The American Association of Exporter’s and Importers (AAE&I) and the Small Business Exporter’s Association (SBEA) can also aid you in your research efforts. Now that you are familiar with where to begin your research, the next step is to identify the most profitable foreign markets for your products or services.
You should: – Classify Your Product/Service – Find Countries with the Fastest Growing Market for Your Products/Services – Determine which Foreign Markets will Be Easiest to Penetrate
Classifying Your Product/Service – The Standard Industrial Classification (SIC) code is the system used by the US government to classify its goods and services. Data originating from outside the US or information available from international organizations are organized under the Standard International Trade Classification (SITC) system, which may assign a different code to your product or service. Another export product/service classification is the Harmonized System (HS).
The HS can be found through information provided by the US Census Bureau (USCB). The Department of Commerce and the US Department of Agriculture can help you with the SIC and SITC codes.
Finding Countries with the Fastest Growing Market for Your Products/Services – Trade associations can often help you to determine where companies in a particular industry sector are exporting their products. The three largest markets for US products and services are Canada, Japan and Mexico.
There are three primary databases that the US government maintains that can help identify those countries that have the greatest potential for your product/service: SBA’s automated Trade Locator Assistance System (SBAtlas), Foreign Trade Report FT925 and the US Department of Commerce National Trade Data Bank (NTDB).
SBAtlas offers information about where your products are being sold and which countries offer the largest markets. Data are supplied by the DOC’s USBC and member nations of the United Nations. The Foreign Trade Report FT925 provides a monthly country-specific breakdown of imports and exports by SITC code. The NTDB contains more than 100,000 US government documents on export promotion and international economic information.
Determine which Foreign Markets will Be Easiest to Penetrate – There are three major considerations affecting the most penetrable markets for your product/service. They are:
1) How does the quality of your product compare to that of goods already available in your targeted foreign market?
2) Is your pricing structure competitive in the foreign markets you are considering?
3) Who are your major customers?
Answering these questions may seem daunting but there are many resources to help you. The DOC’s ITA can help link you with specific foreign markets. FCS staff and in-country research firms can answer many of your questions regarding foreign market penetration.
You can also order a comparison shopping service report through ITA district offices. This is a low-cost way to conduct research without having to leave the US.
SBA’s and DOC’s Export Legal Assistance Network (ELAN) provides answers for your initial legal questions. They can help you with questions regarding contract negotiations, licensing, credit, collections, documentation and more.
The second article of this three-part series deals with entry into the foreign markets that you intend to penetrate. It describes the different ways that you can get your product to your foreign buyers and how to get paid once you have delivered.
Dale Bowyer holds a degree in Economics and East Asian Studies form Oberlin College. He is a seasoned and successful e-business entrepreneur with many years of international e-commerce experience.
