OSBA Features Seven Tips for Highly Effective Exports
Ohio State Bar Association November 1, 2014
Exporting is not easy or quickly mastered. In addition to the planning and preparations required before the first product can be exported to a foreign market, businesses must establish reliable relationships and adapt strategies to local developments. To be successful when exporting, businesses should follow these seven steps:
1) Develop a Long-Term Strategic Plan
Develop a long-term, detailed plan, including a realistic timeline and budget. The plan should also include a strategy for how to contact reliable local partners or agents, and how to establish long-lasting relationships.
2) Focus on Due Diligence
First consider the foreign country’s receptiveness to American products, and then analyze the foreign market from all possible angles. This due diligence analysis should take into account not only the number of documents required for exporting, transportation cost and time, custom duties and tariffs, export license and labeling requirements, tax implications or storage costs, but also the country’s political or social stability, infrastructure, quality of work force, language, timelines of custom procedures, and contract enforcement and collection procedures.
3) Think Global, Act Local
Keep local needs and preferences in mind and adapt accordingly. It is easy to focus on exporting the product globally while forgetting that seemingly minor cultural differen-ces (between cities, districts, counties or states, for example) have a major impact on a busi-nesses’s success. Strategies that work well in one area do not necessarily transfer to another, and must be reevaluated and adjusted according to each location’s business climate.
4) Pay Attention to Geographic Diversity
Since it is almost impossible for a U.S. business representative to learn about and respond to cultural differences, choose a local partner whose familiarity with the desired area adds credibility, commitment and trustworthiness to a U.S. business appearance. Constant communica-tion and involvement of the local partner are key.
5) Be Patient + Commit Long-Term
Send one or more representative(s) to the foreign market to show commitment and create personal relationships among the business partners. Success requires the ex-porter to be mindful of cultural dif-ferences and to provide consistent follow-up. Behavior that deviates from the American business culture is not necessarily a negative sign, but a cultural nuance that may re-quire business model adjustments.
6) Ensure Compliance
Be aware of internationally ap-plicable agreements like the Foreign Corrupt Practices Act (FCPA), which prohibits bribery of (foreign) government officials and requires the exporter to keep accurate financial books and records. The FCPA can impose significant fines and even jail time for guilty individuals. It applies to U.S. countries, citizens, foreign subsidiaries, officers, directors, and agents of a U.S. company. Its scope is not restricted to U.S. ter-ritorial boundaries.
7) Rely on Experienced Global Business Legal Counsel + Advisors
Engage legal counsel and other advisors with deep understanding of the necessary global business requirements as well as the requisite experience with the desired market. Competent advisors can save money and time by structuring entities in a tax-focused way from the beginning of the operations. It is also important to cooperate with local counsel in order to understand the local labor market and avoid non-compliance with specific local regulations regarding repatriation of funds.