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Basics Going International Profitable Overseas MarketClient as Your Partner Cultural Product Designs High Quotation Labor Arbitration3 Simple Import Tips Import License Things Businessman are Grateful
Going global can be exhausting. A lot of hard work and bits of luck are needed for you to be successful in this business platform. This article serves as the handbook you need when going international. To start it off, let us first focus on the basics of doing business abroad, be it importing or custom manufacturing on foreign land before tackling other important tips you need to know for your global venture.
The Basics when Going International
Know the Market
People often already know their clients, goods, and use in the domestic market; in a foreign market, you may not know any of the variables. What you need to understand is you do not understand the market. If you penetrate a market with this approach, you will start fast and save a lot of time and energy.
Select one market and develop a product.
If you want to take on the world, you will lose and will not get anything done. Test the region and study what you can about the nation. Once you have concentrated on a region, select another nation within such market. Study everything you can about that nation and then start to improve your trade.
You not only want to establish friendships, but also trust. Your agents and your consumers should believe in you and your product. You should trust your agents, wholesalers and value chain. If you do not believe the other players, then you will allow your emotions to let you make rash, rather than manufacturing analytical decisions. If you need to establish a truly international trade, then you should travel. Check out the people who make up your value chain. If you don’t, you will end up selecting the incorrect people.
What any new importer needs to know?
So many clients I talk to have the problem with the readiness to outsource. Importing is big business, so you need to know exactly how much money you’ll spend. If they are ready, then a variety of reasons to consider when taking your business to the next level. The most obvious place to start is where to outsource from. The place where you outsource may be more important than product pricing. Why? Well, the risk associated with the country reduces price savings. Check the ease of doing business rankings. This often gives a glimpse of the country’s ability to cater to your firm.
Likewise, the distance of the supplier from both the coast and your country may influence pricing. In addition, customs clearance fees, duties and brokerage fees may also influence product pricing. Customs fees relate directly to the trade agreements between the importing and exporting countries. Free trade agreements (FTAs) improve foreign market access and reduce your bottom line. To really save from exporting, go big or go home. As an importer, you should always compare per unit costs between domestic and foreign suppliers.
Sometimes, the price reduction may not be worth it as communication may slow down production lead time. I recently had a client who looked to purchase furniture but could not provide product prototype. This led to delays in production. The further the supplier, the longer the transport time. Customs will influence your timing. If you do not properly adjust for customs clearance, then your timing will be off. So when starting to import from abroad, I always suggest the following steps:
1. Start small
Going small allows you to streamline the processes immediately before the larger sales. This will give you a good feel for the importation. These steps will allow you avoid getting a warehouse or over purchasing in the event the new product design fails.
2. Market, market, market
Your new product design is entering the market. NOBODY knows your product—especially, if you are a new manufacturing company. This means that you have to work on getting your name and get your product respected.
3. Go direct to consumer
Skipping sites like Amazon will add an air of authenticity to your manufacturing company. Make a website along an ecommerce business plan and make sure your consumer can purchase directly from you.
4. Properly label the items
People mess this up all the time. So much that I’m going to go over it in detail below.
Firstly, labeling is a law in most countries — particularly when you are importing items for consumption. Failing to list the proper ingredients in line with FDA (or your importing country’s) standards can lead to a recall or bar the product from entering the country all together. Each order must have a test for quality assurance; this includes a list of materials used.
The Food and Drug Administration contends, “Labeling mistakes are the biggest cause for food recalls, with the administration sometimes listing two or three recalls a day. Much of this is due to overseas distributors, as there aren’t specific rules in place for monitoring labels that are imported from overseas,”
Check the following steps to ensure you will not encounter labeling blunders:
– Check online with a keyword search
– Talk to your consumers or distributors
– Talk to your local regulator. In America, the Federal Trade Commission (FTC) protects consumers.
– Use third-party agents to check labels prior to leaving the exporting country.
– Talk to a customs broker to make sure the documents are filed appropriately.
Select a Profitable Overseas Market for Your Business
Once you have a good idea for your import/export business, you should decide which overseas market you are going to enter. Here are some factors you need to take into consideration during the decision-making process.
First, you need to determine the market condition; therefore, you will ask yourself some questions below, because each country might offer a unique advantage versus another:
- Who will buy your product, and why?
- What is the size of the market?
- Who is your competition?
- Is the product design new to the market you have selected?
- Are there growth opportunities in the market?
Next, you need to understand how will culture influences affect your product or service. A simple solution for this issue would be to export to cultures which are similar to your own locale.
This time you should think about the size of the potential market in terms of population and the amount of money people have to spend (GDP per capita purchasing power) – Can consumers afford your product?
Lastly, relationships rule the world and you’ll be cultivating lots of them through the course of managing your business. Thus, you must do your homework in order to choose the right market for your business.
Treat Your Client as Your Partner
When thinking of a global business, it is inevitable to work with partners to get your business going. It is impossible to be a stand alone in this business platform as even major trading corporations seek to have allies to support their own.
There are always opportunities for you to become your customer’s “partner” in many of their endeavors. Just keep an eye out for how you can help them get where they want to go, not only in terms of business but also personally, spiritually and intellectually.
Prove that you’re not only a good partner, but also a valuable all-around business associate. Offer your customers fast-breaking news, ideas, good manufacturing practices and useful contacts that will help their business, even if the information doesn’t have anything to do with yours. You can find appropriate and professional ways to contribute to your customer’s personal interests later.
Another way is to recommend good people as business owners value time and great employees. An expert will always bring rewards in the long run. You can engage with your customer on a variety of online platforms, encouraging networking, learning lean manufacturing and growing together.
Have Cultural Awareness in Your Product Designs
When you market your products and services globally, you have to be extremely sensitive to colors, symbols, numbers and layouts. Tailor your products to individual markets.
To marketing materials or product packaging designs which resonate with consumers in another country, one must develop the right mindset, or worldview – it requires you to be inquisitive. When you are going to export your products, you should think about what the packaging design colors work in the country of destination. You have to tailor the product to meet their individual needs.
One way to understand the market is to send a few samples to a prospective customer and get feedback. From this, you can make a list of everything that needs to be addressed and make the adjustments. If you can’t personally go to your destination of interest, find a local who can tell you if people really need your products.
What does a High Quotation Mean?
If the buyer does not care about the details, why should the vendor? One of the reasons could be “Just make it a high price to cover our backsides”.
Vague, non-specific requests lead to “price padding”: a higher price just in case a new quote means a lower price later. Most inquiries from small buyers are too vague, especially promotional products and custom clothing items. No matter where a quick, unprofessional inquiry causes so many questions; you can’t blame the vendor who is forced to guess.
Different quality level considered:
A high price might be because factors of the job there are not necessary for your specific case. Different processes are applied, which may not suit your needs. This in turn may increase (or decrease) your manufacturing costs. Do you need the additional layer of packing? Do you need the more high-end piece?
In most cases, the quote is high because the use of the product isn’t on the original RFQ. Is it for product prototype, promotional item or a more long-term use? (to be a short-term use item while high perceived value, let the factory know) If you do not need a quote for higher-end caliber material, let the factory know. The more specific information you provide in the last brief, the more precise the factory is in quoting.
For small quantity:
Small quantities can mean high prices. This does not mean the vendor is not quoting properly; however, smaller runs simply warrant a higher quote in the particular case. Smaller runs have material waste, actually take more quality control and look expensive because a base price is still required. When this is proportioned over a small quantity, it makes each unit look expensive. The truth is the math.
Labor Arbitration is Different from Commercial Arbitration
China is a heavy favorite when it comes to doing business in an international scale due to its custom manufacturing power. A lot of businesses outsource manufacturing services in China given its cheap labor and just in time manufacturing expertise. In this section, let us try to discuss arbitration disputes having China as an example.
No common solution to the “best” jurisdiction exists; Chinese law is vague as to whether or not parties can take an employee non-compete agreement dispute directly to court without prior labor arbitration.
While labor and intellectual property (IP) disputes are different in China, the jurisdiction under which non-compete agreements fall varies. The distinction matters because if it is treated as a labor law dispute, parties must first go through labor arbitration before filing suit. Labor arbitration cases fall under local arbitration centers—not the China International Economic and Trade Arbitration Commission (CIETAC) which are used for commercial disputes.
In practical situations, different regions in China have different understandings of how to categorize employer-employee non-compete disputes. To illustrate, some courts in Zhejiang province and in Hangzhou are of the opinion that such dispute are labor law disputes and without a labor arbitration award, neither party can bring a suit in court.
In Shanghai, frankly speaking, employer-employee non-compete cases must first go through labor arbitration (note each district within Shanghai may have different requirement). However, some courts in Beijing believe that not every non-compete dispute must go through labor arbitration before litigation, and instead have ruled that claims for violating a non-compete agreement are “normal civil disputes” that can go straight to litigation.
Chinese law stipulates the statute of limitations for labor law disputes is one year while two years for IP which means the time to file a non-compete dispute will vary with each jurisdiction. In case you fail to allot enough time for labor arbitration, the statute of limitation may expire. Under the current legal regime, it is possible especially if the employer does not have a clear dispute resolution clause or is slow to pursue its non-compete claims.
The point is to know how the jurisdiction handles non-compete contracts and give adequate time to go through the labor law proceedings.
3 Simple Import Tips You Should Never Forget
Companies and individuals profit from importing in two ways: arranging with a manufacturing company abroad to produce your own manufacturing design or importing pre-made products to sell domestically.
Import Tip #1: Find Your Niche
If you are based in a cold country, there would be little use in importing sun cream. Alternatively, importing a product that would be highly sought after may not be a great idea, as the demand may already be met by established companies who can beat you in terms of margins. Finding this middle ground may be difficult, but if you are able to successfully identify a gap in the market, you are well placed to finding a suitable product to import from here in Asia.
Import Tip #2: Follow These General Rules of Thumb
- Avoid counterfeits which are trademark infringing products. You don’t want to invite any unwanted legal problems. Also, you should also think about logistics.
- Large and heavy objects eat up your profits on freight, as it can be costly to ship from Asia or any other continent. On the other hand, small objects which are light are more suitable, as you should save on shipping fees per a unit, just ensure the mark up is worthwhile.
- Avoid big box competition and e-commerce sites. If big box retailers are selling the same product, it is unlikely you can compete. If you are planning on selling online, trying to compete with power sellers on eBay will also end well. Remember, the best method is to be the main seller for a specific niche, which should ensure you avoid competing directly with too much competition.
Import Tip #3: Find the product
Now comes finding the product itself. In an ideal world, you should book a trip out to one of the trade fairs, especially one of the popular ones in China. This will grant you the first look at some of new product designs which may give you a first mover advantage. However, the feasibility in this is not quite realistic for a lot of budding importers.
Our best advice for this stage is to keep your ear close to the ground. This includes keeping eyes on what competitors may be selling. However, it also means paying attention to the latest trends, and identifying what is becoming popular before it hits the mainstream. If you read about it in the newspaper, chances are, the ship has sailed in terms of making a profit.
Potentially, you could discover a great product by looking at highly ranked items in other territories. Amazon DE may be seeing strong sales in item X which has not been brought over to your local area yet. Alternatively, you may want to network with suppliers through sites such as Alibaba or DHgate. This may enable you to get access to a wider range of products than advertised, letting you be one of the few in a position to bring a new product design to market.
Overall, there is no guaranteed way of finding the perfect product. At times it is more luck than skill, especially when you are starting out. Over time and through many trials and errors, you will gain experience and learn what works for you. Hopefully this article will have given you a strong idea of what lines of thinking needs to be taken to start you on your journey of finding that perfect import.
Import License: Taking Baby Steps
The United States is one of the few countries that do not ask for a license to import. A large number of products are imported freely with no limitations. Most other countries require import permits and place many restrictions items. Therefore, you must think whether your target country needs a permit for your product and, if so, how to get one. Follow these steps and you should be on the right path.
- If you are into manufacturing, then ask your supplier for guidance:
Hopefully, you trust your supplier since it is the shipper’s responsibility to comply with government regulations within each country. This means you should ask your supplier — at the beginning of your negotiations — if an import permit is required. Next, you should ask if they can assist you in obtaining one. This strategy works most of the time. Think about it; If your product can’t enter the country, both you and your supplier won’t get paid.
Ask for a statement in writing from your supplier that he/she is solely responsible for making sure the product you are importing complies with the importing country’s laws and regulations. Look for how long the import permit is valid and understand all the conditions; if you are sued due to one of the products violating the country’s laws and regulations, the supplier should indemnify you.
You should always work with an international lawyer well versed in the laws of the import country which reduces your exposure.
- Contact UPS, FedEx of DHL for help.
Large global transportation companies can ship your products to any country and help with the necessary documentation required for customs clearance. More importantly, they can get your stuff to you fast and cheap. Essentially, they are your customs broker and they usually know all of pertinent laws and regulations.
- Check with the local government’s international trade administration office to determine whether you need an import license and how to get one.
A quick search via the name of the import country along with the words “import permit” provide supplemental information which can be used in conjunction with the big global transportation companies.
10 Things any Businessman should be Grateful for
As businessmen in the trade and contract manufacturing industry, all we think of 99% of the time are profits, make money or at the very least: break even. We sometimes forget other facets of the business which we should be thankful for regardless of how our business is performing.
People in business, like life, sometimes need reminders on why we do what we do. Here are ten reasons for importers and exporters to be thankful and hopeful:
- You have customers: You should have a key group of loyal customers to be thankful for, especially those who buy from you from thousands of miles away.
- You have customers who pay on time: Only a few customers actually pay on time.
- You have money in the bank: You have enough money to put food on the table, can pay your bills and dip into your savings from time to time to cover theatre tickets on a rainy day.
- You have support from friends, family and pets: We get love, strength and support from friends, family and pets during our business.
- You have access to the Internet: We easily sell products online and we are able to find great suppliers in remote parts of the world.
- You are using social media and networking platforms: The ease of connecting with people all over the world.
- You have drive, passion and hopefully good health: Drive and passion are 2 key ingredients needed to be successful in any business.
- You have access to transportation companies: We should thank these folks who provide us the transportation services.
- You have many payment method options: Thanks to technology, we have thousands of choices to speed up the payment process.
- You do what you love: By doing what you love in the field of contract manufacturing, you are making a dream come true.
Wrapping up this article with a set of things any businessman should be thankful for is only fitting. The other tips mentioned above should be more than enough to assist you on your business plan of going international. Obviously, there are still other complications not covered in this article, but the sections provided are very useful enough. Wishing you the best of luck on going international!