Global Trade Tutorial : Developing Export Strategy

This section details issues involved in entering the foreign market, finding and developing trade leads, exporting directly and indirectly, pusuing international bid opportunities, managing and motivating distributors, promoting your product and traveling overseas.

Once a detailed market analysis has been completed, your company should develop a method of market entry. Each of the general categories listed below come with their own unique trade-offs between financial risks, product control and organizational goals.

The indirect methods of market entry usually require less marketing investment, but you could lose substantial control over the marketing process. Direct exporting may necessitate larger capital investment in marketing, but your degree of control over export strategies is greater. Corporate presence is an option for companies with successfultest marketing.

Direct Exporting

You can sell directly to customers in foreign markets by establishing an export department within your organization. Selling through your company's sales department creates an opportunity to establish a closer relationship with the overseas market and buyer. In addition to selling directly to the market you wish to penetrate, you may also choose to use an export manager to handle other parts of the world. In fact, in some countries, you cannot sell directly to the end-user, you must use a local agent or representative. This is true in the Middle East, Central America, and in some Asian countries.

Other direct exporting options include using a variety of exportintermediaries, as shown below.

Manufacturer's Representative or Sales Agents

Generally, a representative or agent refers to a person who is responsible for closing the sale and taking orders on a commission basis. They do not take financial responsibility or collect payment for the goods sold, and they assume no risk or responsibility for the product. Remember that the primary interest of all salespeople is to make the sale, it is your responsibility to check credit and arrange payment terms. A representative will want a contract from you for:

• Guaranteeing Territory
• Exclusivity
• Method of Compensation
• Term of Service
• Representation of the Product Line for a Definite Period of Time

In most instances, the representative will be servicing both local and import accounts, as well as selling complimentary lines that do not compete. The representative utilizes the product literature and samples that you supply.

There is some controversy over the term agent. Depending on the country, the term carries a rather broad interpretation of legal responsibilities involving the agent's independent activity to contract on your behalf without your instruction. Avoid using the term agent. Any contract should clearly indicate legal authority of the representative to obligate the firm.

Foreign Distributor/Importer

The foreign distributor purchases the product and is always responsible for payment of the export item. They assume financial risk and generally provide support and service for the product. Distributors often buy to fill their own inventories and typically carry a range of non-competitive, but complementary products. Beware, some distributors have been known to take on products they purposely don't sell to check competition.

The distributor should maintain adequate facilities and staff for day to day servicing. Investigate this option if your product requires maintenance or spare parts. Payment terms and length of contract time are usually initiated with a short trial period. Territory exclusivity is normally required by the distributor.

Overseas Retailers

Selling directly to a foreign retailer relies mainly on traveling sales representatives. Another distribution alternative uses overseas buying offices of domestic retailers. These buyers can also be a practical source of foreign distribution for American manufacturers. Print based selling techniques that use catalogs, product literature, and brochures can also reach the marketing base of foreign retailers and they reduce the cost of traveling.

Product sales are usually limited to consumer goods which can be sold at a lower price, reflecting the absence of a representative's commission. It is recommended in Exporting From Start to Finance (Wells, 1995) that you sell to the retailer at a price flexible enough to allow you to pay a representative in the future. In general, stores are more willing to select the service of a representative who places the order for them, and services their account with follow-up channels of communication.

Central Trade Offices and Trading Companies

Buying offices or central trade offices are often divided into industry groups that buy for the whole country in some of the few remaining controlled market economies. China is the largest controlled economy that maintains trade and buying offices, often called Foreign Trade Corporations. They may buy for the whole country or for regional groups and provinces. Chinese trade organizations do most of the negotiating and contracting, which reduces the risk of bargaining with lower level officials who do not have ministry approval.

Native to Japan, general trading companies, called "Sogo Shoshas", set market trends for Japan's internal and external trade. These trading companies can be a valuable resource for businesses who are seeking to participate in the Japanese market. Major trading companies usually have offices in the United States, however, they may have to send a sample to Japan for final approval. Allow time for product transportation and evaluation.

Indirect Exporting

While direct exporting may be a profitable method of foreign market entry for some businesses, sale by the exporter through an intermediary may be a better alternative to the complex tasks and risk involved in direct exporting.

Domestic Intermediary

Export Management Company

An Export Management Company (EMC), functions as an "off-site" export sales department, representing your product along with various non-competitive manufacturers. The EMC searches for business for your company and usually provides the following services:

• Performs market research and develops a marketing strategy
• Locates new and utilizes existing foreign distributors or sales representatives to put your product into the foreign market
• Functions as an overseas distribution channel or wholesaler
• Takes title to the goods and operates on a commission basis

Note: The EMC may or may not take title to the goods; it depends on the arrangement between the EMC and the manufacturer. In addition, an EMC must balance the product lines it represents. Product diversification is essential to protect against radical foreign market changes and maximize economies of scale.

Export Trading Company

Export Trading Companies (ETC) are very similar to Export Management Companies. The ETC is more likely to take title to the product and pay you directly, but like an EMC, they can also act as an export department. Usually, there is less responsibility on the part of the ETC towards the supplier and they tend to be demand driven and transaction oriented.

There is legislation which promotes the use and formation of an EMC or ETC by providing the EMC/ETC with immunity from prosecution from antitrust regulations. It permits banks to invest financially in EMCs/ETCs and reduces restrictions on trade financed by financial institutions. Officially, an ETC is a legally defined entity under the Export Trading Company Act, with specific responsibilities and obligations. In contrast to an EMC, an ETC is very difficult to set up. There are special certifications and requirements, along with detailed paperwork.

An example of an ETC is Mitsui; they buy and sell goods on their own behalf for their clients. Before deciding to use an EMC or ETC, consider these pros and cons.

Advantages and Disadvantages of Using EMCs/ETCs

There are advantages and disadvantages to using an EMC or an ETC. Wells (Exporting From Start to Finance), gives credit to the research of several accounting firms summarized by Catharine H. Findielson of Coopers & Lybrand in Washington, D.C.

Advantages of Using an EMC/ETC

• Faster entry into the overseas market in terms of first recorded sales.
• Better focus on exporting, because most firms give priority to their domestic problems.
• Lower out-of-pocket expenses.
• An opportunity to study the methods and potential of exporting.
• Expertise in dealing with the special details involved in exporting, as well as its strategies.

Potential Disadvantages of Using an EMC/ETC

• Loss of control of the export strategies and quality control of after-sales service.
• Competition from the EMCs/ETCs other products.
• Reluctance on the part of some foreign buyers to deal with a third party intermediary.
• Some added costs, and higher selling prices because of gross profit margin requirements of the EMC/ETC, unless the economies of scale can be used to off-set this factor.
• The possibility of the EMC/ETC neglecting the client's product in favor of other products that might be more profitable and easier to sell.

Overseas Intermediary

Licensing

Licensing offers a small business the advantages of rapid entry into foreign markets as well as reducing the capital requirements to establish manufacturing facilities overseas.

As described in Exporting from Start to Finance (Wells, 1995), a license is basically a contract to identify what part of the licensor's trademarks, patents, designs, copyrights, and know-how are being licensed.

Important considerations:

• Be careful to protect trademarks and intellectual property by securing proper patent and trademark registration before signing a licensing contract.
• Make sure agreements are not in violation of the host country's existing trade/product regulations or restrictions.
• Don't wind up a competitor to your own product by having your own design or know-how used to compete in territories which you are selling directly.

Although the major disadvantage of licensing is the possibility of losing control over manufacturing and marketing, many times you can learn much more from your licensees by giving attention to original product improvements.

Franchising

According to Wells, in the United States franchising accounts for more than 35 percent of total U.S. retail sales. Although this rate has slowed over the last few years, international expansion is occurring in nearly every world region. Most companies already have successful domestic operations, with the most popular franchises occurring within the restaurant and retail sectors.

Franchise agreements tend to give the franchiser more control over marketing, since it is the company's reputation and existing market relationship that adds value to the product. With almost any overseas arrangement, distribution approaches must incur expenses to support foreign marketing such as advertising. However, the overall investment by franchisers is much less than for company-owned sales outlets.

Companies like McDonalds and Coca Cola are prime examples of success in overseas markets. Japan, Europe, Australia and Asia are increasing their franchise development. Canada is also a high-ranking country for goods sold through franchise outlets, largely due to its location. The United Kingdom claims over 2500 franchise operations.

Contracting

Agreements with foreign manufacturers to produce your product, as opposed to exporting to the overseas region, are referred to as contract manufacturing. It is an easy foreign market entry method when your manufacturer is already producing your product for the domestic market. It can also be the initial instrument used to create a subsidiary company in a foreign country. Although it is a method of indirect distribution to foreign markets, it does not address sales and marketing issues of the finished product.

Issues to consider:

• How much intellectual knowledge should you deliver to the manufacturing firm to make contracting possible.
• Quality control at overseas production facilities.
• Lack of control over geographical, cultural or economic conditions.
• Third party disclosure of confidential product information.

In contrast to licensing, contract manufacturing does accommodate company management roles in the foreign operation. However, you will also have to interact with entirely new management, located in a different country, whose first language is probably not English. Regardless of these disadvantages, the contracting manufacturer will have knowledge of the foreign market as well as the business and political contacts to facilitate market entry.

Other Intermediaries

Piggyback Marketing

A company which already has an export distribution arrangement established may need to provide other goods or services to supplement the product. Permitting another company to market your product or service along with its own is called "piggyback" exporting. This type of exporting works well with accessory type products (computer hardware/software) or follow-up services where a third party adds value to the distribution system by offering a more complete solution to the foreign market.

Export Merchants

These remarketers purchase and then re-package products (usually under their own label) to establish exclusive markets and customers. The main disadvantage of using export merchants is that your company could lose control over product pricing and marketing in overseas markets. Care should be taken to track the territories the remarketer's products are reaching to avoid interference with current export activities.

Corporate Presence

Entering the foreign market by establishing an overseas presence requires careful planning and legal guidance. Corporate presence decisions that involve the establishment of a foreign subsidiary as the primary method of selling to an international market are on the rise for both small and large companies. However there are alternative approaches to foreign distribution.

Alternative Distribution Approaches

Joint Venture

Joint ventures bring together a foreign company and an American company with similar goals to establish a market entry and a distribution network. Each partner brings specialized skills that make significant contributions to manufacturing and distribution capabilities.

Unique features of joint ventures include:

• Joint ventures can be equity or non-equity partnerships.
• In some countries, a joint venture is the only way an American company can set up operations.
• Host country laws often require a citizen from that country to have a percentage of ownership.
• Both partners make substantial investments into the venture.

Unlike licensing, joint ventures require a direct investment for management, technology transfer, training, and foreign relations. However, in a joint venture agreement, your company is in a position to expand resources, export experience and market knowledge while spreading the risk and laying a distribution framework. There are also several forms of tax advantages or waivers offered by foreign countries for joint ventures.

Strategic Alliances

Strategic Alliances is a broad term used to refer to alternative alliances, other than joint ventures or subsidiaries. An alliance is a form of presence in the overseas market that represents more than a simple buy/sell agreement. It has a well structured purpose, shared management strategies and financial goal. Companies that form strategic alliances do not necessarily create an independent business organization. For example, a strategic alliance may take the shape of any one, or combination of the following agreements:

• Intellectual/Technology Sharing
• Cross-Licensing
• Distribution Arrangements
• Equity
• Product Development Coordination

Many small businesses view strategic alliances as an alternative to capital intensive investment approaches to foreign market entry.

Subsidiaries

In contrast to a joint venture agreement, a subsidiary agreement guarantees control over all decisions involving marketing and production. Its technologies, patents, trademarks, and know-how have the maximum protection available under the host country's laws. (Exporting From Start to Finance, Wells, 1995).

A subsidiary is treated the same as host company operations in terms of benefits, regulations and taxes. For obvious reasons, there are choice places in the world to consider for jointly or wholly owned subsidiaries and manufacturing facilities. Factors to consider range from low labor costs and government regulation to tax and economic incentives.

Expert legal advice is recommended to determine true advantages of the subsidiary agreement within the laws and customs that are unique to the host country.

Finding Trade Leads

After deciding to pursue export methods for your product, you need to develop leads to opportunities with end users, distributors, and potential joint venture partners and representatives. If the buyer or end user is readily identified, this is simple. However, sometimes it is necessary to identify leads for the required buyers, distributors, representatives, or joint ventures. These are often available from a variety of government, public and private databases, programs, and electronic resources. Promotion Service Centers provide ample opportunities for finding trade leads, and the Trade Information Center at 1-800-USA-TRADE is another excellent resource.

Government agencies and sources are available from federal, state and local agencies. Private agencies and sources include chambers of commerce, business associations, trade shows, and traditional media sources. Electronic sources, including the Internet, represent the newest, fastest growing, and potentially most promising mechanism.

Government Agencies & Sources

The primary avenue for leads in the government sector is from agencies of the Federal government such as the Department of Commerce (DOC). The DOC coordinates services, publications and trade shows. Additional sources are available through state and local governments, although not as extensive. Many of these services are available at little or minimal charge. Read on for more information about government agencies and sources.

United States Department of Commerce

The Department of Commerce (DOC) identifies and qualifies leads for potential buyers, distributors, joint venture partners and licensees from both public and private sources. In addition to its own product, country, and program experts, the DOC utilizes an established network of commercial officers located in countries that represent 95 percent of the market for U.S. products.

The services available through the DOC are divided into Contact Programs which provide lists of prospective contacts and Trade Event Programs which facilitate in-person contact between potential buyers.

Up-to-date lists and specific dates are available from the nearest Commerce district office. You can also can contact the Export Promotion Service, U. S. Department of Commerce, 14th Street and Constitution Ave., N.W., Washington D.C.; telephone (202) 482-2505.

United States Department of Agriculture

The USDA utilizes an organization of embassy officers and attaches, trade officers, analysts and marketing specialists to provide the following services:

• Trade Assistance and Planning Office: Information source for foreign market conditions and making contacts.
• High-Value Product Services Division: Promotes U.S. Products overseas through several programs including:
• AgExport Connections: Provides trade leads through printed and electronic communications, foreign buyer lists, and promotions of U.S. Products to overseas buyers.
• Trade Leads: Electronic and print dissemination of current trade opportunities.
• Foreign Buyer Lists: Specific information regarding overseas buyers that have previously indicated interest in U.S. products.
• Buyer Alert: Weekly newsletter and promotional service for exporters.
• Commodity and Marketing Programs: Supplies information on specific commodities including marketing information, market needs and consumption, and available supplies.

United States Agency for International Development

USAID is responsible for the majority of the U. S. Foreign economic assistance programs. As such, it offers a conduit for the export of U.S. services and goods. Opportunities are available for the export of commodities, expertise, and equipment. Additionally, the use of USAID funds overseas opens avenues for the purchase of U.S. goods and services.

United StatesTrade Development Agency

The USTDA is an independent government agency that funds feasibility studies, analyses, and training programs in emerging overseas markets and Eastern Europe. Its contracts have to be assigned to U.S. companies. TDA activity is primarily oriented to determining the viability of markets available for export of U.S. goods and services. This gives rise to many opportunities for analysts, consultants, and managers. Additionally, those involved in the program obtain a "leg up" on competition through the development of market expertise and contacts.

State and Local Governments

Many state and local governments will provide assistance to potential exporters although this will vary by locality and product. There is often a specific alliance between certain state and local governments and specific overseas counterparts such as "sister cities." Services often include:

• Trade Leads: Usually available from agencies of state and local governments such as the California Office of Export Development.
• Mission Planning Assistance and Introductions: Frequently available at the state level in conjunction with trade shows arranged to showcase a variety of goods and services native to that state.
• Promotional Assistance: Many state and even local governments realize the benefits to their economies by promoting exports for your organization. Several fund print and electronic materials as well as hosting trade shows and supporting trade missions.
• Existing Contacts: As with other government agencies, a database of previous contacts and interested parties are maintained by state and local government agencies from their prior activities.

Most of the government sector activity is confined to the federal level, particularly the Department of Commerce. Other agencies may be more appropriate resources for your product and should not be neglected.

Private Agencies & Sources

Existing business relationships and associations provide another avenue to making export connections and obtaining leads. These include:

• Banks and other Financial Institutions: Most larger banks and financial institutions are now multi-national, have correspondent relationships with overseas counterparts, or maintain a department to handle foreign financial transactions. These can frequently provide leads and introductions to overseas markets.
• Business Colleagues: Business colleagues with existing relationships and firsthand experience may give personal recommendation or introductions to prospective representatives, buyers, or distributors.
• Trade and Industry Associations: Trade and industry associations are an excellent opportunity to share information and contacts with those having similar interests and contacts.
• Trade Shows and Missions: Trade shows and missions are one of the best ways to not only share information onal expertise.
• Chambers of Commerce: Chambers of Commerce are normally involved in trade shows and missions. They maintain a database of contacts for those expressing interest in U.S. exports. Frequently, Chambers of Commerce maintain "sister" relationships with overseas chambers in se they place ads in trade journals.
• Trade Directories: Publications such as Trade Directories of the World by Croner Publications provide lists of trade associations and facilitate contacting established entities interested in exports/imports.
• Brochures and Catalogs: Brochures and catalogs exhibiting your company and/or products not only provide information but can also promote through a variety of other sources such as trade shows, catalog shows, and direct mail or contact with buyers, distributor, or representatives.
• Telephone Books: Telephone books can often be obtained through an embassy or banking contact if a specific target market has been selected.
• Posters and Billboards: In many countries, particularly Latin America, posters, billboards, and ads on buses, taxis, and sports arenas serve well to advertise the benefits and availability of your products.
• Foreign Trade Association Newsletters: The correspondence available from overseas can also provide leads regarding perceived needs and requirements in those markets.

Television and Motion Pictures

Television and motion pictures can serve to elicit interest in several ways:

• Primarily, direct advertising reaches a broad market quickly.
• Secondly, the display of your product in a successful motion picture or television production can provide not only exposure, but also demand.
• Finally, current methods of telecommunication permit the interactive review of products and their features with potential leads.

Electronic Media

Electronic formats have the potential to accommodate all and replace many of the existing ways to locate leads. Electronic access to all previously listed government and private services, events, publications, and foreign associations is available.

Finding An Overseas Representative

Once you've determined that you want to export directly, instead of indirectly, you must decide if you want to sell through an agent (often called appointee) or a distributor (also called dealers, jobbers, wholesalers, and sometimes even retailers). There is a substantial difference between the two categories both legally and functionally. It is often difficult and expensive to unwind from established relationships, therefore it is important to carefully determine the correct connection for your exporting efforts. Once this is made, you need to locate, select, screen, and reach an operating agreement with your contact. Follow the links for more information.

• Decide if you need an agent or distributor.
• Compile a list of possible representatives for each market.
• Contact potential representatives describing your intentions.
• Evaluate each potential representative's reputation, capabilities, and financial status.
• Draft and execute agreement.

A thorough analysis of your needs and requirements, as well as a comprehensive search, evaluation, and selection are critical to the success of your marketing effort. Remember, the time spent here is time well spent and the completeness of your search will reflect in the performance of your export program.

Agent or Distributor?

The decision whether to use a distributor or an agent is a substantial one and vital to the nature of your overseas efforts. The success or failure of your export effort will depend upon this decision. Consultation with your legal counsel, the practicalities of your export requirements, and the traditions of the country you are exporting to will have substantial bearing on your decision. The time and effort spent up front in your evaluation and determination of the correct avenue will greatly benefit the success of your export program.

Representation of any kind in a foreign country is much like a marriage, it can be easy to get into but often difficult and expensive to terminate. If you are not confident in your selection of a representative, sell directly to retailers or other end users until the right one is located.

Use an Agent if:

• It is the accepted distribution method in the country you are exporting to.
• You do not need to maintain inventory in the foreign country. For example, if you manufacture custom or capital equipment, sell services, or can have inventory shipped direct for individual orders, you probably do not need to keep stock and maintain a distributorship program in the foreign country.
• You want to maintain direct control of the sales of your products overseas. Since agents sell the product on behalf of the exporter, they must sell it at the exporter's price, under specified conditions, and with prescribed representations.
• You intend to benefit from corporate identity and intend to conduct business under your own name.

Use a Distributor if:

• It is the accepted distribution method in the country to which you are exporting.
• You need to maintain inventory on the foreign country and do not want to maintain your own distribution network.

Compile Potential Representative List

Once you've determined that you will use a representative, you must locate possible candidates to act on your behalf. These are available either through government sponsored or private sector programs, databases, business contacts, and a host of other methods. One of the best sources that can minimize your search efforts is the Department of Commerce Agent/Distributor service. If your product has 51% or more U.S. made content, the DOC will send your product literature to the specified foreign country, conduct a search, and prepare a report identifying up to six foreign prospects who have examined your literature and expressed interest. Read the following for information on additional sources

Government Assistance Programs

The primary avenue for leads in the government sector is from agencies of the Federal government such as the Department of Commerce (DOC). The DOC coordinates services, publications and trade shows. Additional sources are available through state and local governments, although not as extensive. Many of these services are available at little or minimal charge. For California exporters, Trade Promotion Service Centers can provide counseling and resources to help you find distributors.

Most of the government sector activity is confined to the federal level, particularly the Department of Commerce. Other agencies may be more appropriate resources for your product and should not be neglected.

Private Agencies and Sources

Existing business relationships and associations provide another avenue to making export connections and obtaining leads. These include:

• Banks and other Financial Institutions: Most larger banks and financial institutions are now multinational, have correspondent relationships with overseas counterparts, or maintain a department to handle foreign financial transactions. These can frequently provide leads and introductions to overseas markets.
• Business Colleagues: Business colleagues with existing relationships and firsthand experience may give personal recommendation or introductions to prospective representatives, buyers, or distributors.
• Trade and Industry Associations: Trade and industry associations are an excellent opportunity to share information and contacts with those having similar interests and contacts.
• Trade Shows and Missions: Trade shows and missions are one of the best ways to not only share information with other exporters, but provide the opportunity for direct contact with interested buyers, representatives, distributors.
• Export Seminars: Seminars oriented towards exporting offer yet another opportunity to meet like-minded and experienced producers as well as develop additional expertise.
• Chambers of Commerce: Chambers of commerce are normally involved in trade shows and missions. They maintain a database of contacts for those expressing interest in U.S. exports. Frequently, chambers of commerce maintain "sister" relationships with overseas chambers in selected markets as does the California/Canada Chamber of Commerce.
• Miscellaneous Contacts: Many times contacts can be made through unexpected sources such as freight carriers, shipping agents, airlines, commodities brokers, port authorities, and others can be a valuable source of information, contacts, and leads.

Electronic Resources and Other Media

Current technology enhances the distributor search effort by giving you access to the Internet and World Wide Web. Several programs can be accessed through the Web and will be instrumental in your search. You may also have some success using directories at a library with an extensive international business section. Have the librarian locate directories of importers for the specific countries you are interested in and scan them for products for your particular industry.

Contacting Potential Representatives

Having obtained a list of contacts of potential representatives, the next step is to establish contact to determine those who might be available and have interest in acting in that capacity. The best method is the face to face contact which is available during trade shows, trade missions, and foreign travel. If this is not practical, communicate through written correspondence. Contact representatives through letters, telephone or telefax, cables, or for many, through the electronic medium.

Download the Initial Letter To Potential Export Sales Representative (50k PDF), a sample letter to use as a guideline in your initial contacts with distributors. Remember to use the BACK button in your web browser to return to this page.

Use this sample as a guide in developing your own communications under the review of your legal counsel. If the communications can be drafted in the language of the foreign country, that will be even better. Initial communications should convey the following, at a minimum.

• Background information on your firm
• Information regarding your product
• The type of sales representative you are seeking
• Available information regarding your target market and/or end user
• Deadline for securing representation in the local market

Take care that you don't make an offer or imply a contract, instead your communication should be a solicitation for a proposal. Keep track of your communications and responses. If you do not have a response from your contact within 30 days of your first efforts, send a follow up letter. If there is still no response within another 30 days, consider placing this contact on your inactive list.

Evaluating Potential Representatives

As previously stated, the arrangements you make with your representative are critical to the success of your marketing efforts. Too little care in evaluating and selecting your representative may be regretted later. You want to know as much as possible about your contacts to make informed decisions and assure mutual compatibility. At a minimum, you should consult the following information when available:

Background Information on the Representative

The more information available to you on a prospective representative, the better. At a minimum, you should inquire about the following:

• Company letterhead
• History and experience, particularly with similar products or industry
• Qualifications of principals and/or officers
• Adequacy of personnel, facilities, and resources
• Availability of the resources to meet your requirements
• Current sales volume and size of inventories
• Territories they cover
• Product lines they carry (including competing or complimentary products)
• Customer base
• Current clients
• Past Performance
• Familiarity with U.S. business practices
• Nature of Sales force
• Media resources

Third Party Evaluations

Often, evaluations are made by independent companies and agencies. Several reports are published by Dun and Bradstreet and Graydon.

Bank and Trade References

The relationship a contact has with his bank, as well as the extent and nature of credit availability, types of accounts, and history, are often indicative of the prospect's business practices and history. Additionally, trade contacts such as suppliers, shipping agents, customs brokers, etc. can provide valuable background regarding the history, strength, integrity, and reliability of the contact.

Current Business References

One of the best ways to explore how you might expect a relationship to proceed can be indicated by those your prospective representative has current business relationships. These can be other exporters currently utilizing this source, accountants and legal firms, and industry and trade associations.

World Traders Data Report and Commercial Credit Reports

Credit reports are often available from commercial sources such as TRW. They can provide information regarding your contact's financial strength, payment histories, and other relevant financial data. The Department of Commerce prepares the World Traders Data Report which focuses on the background, number of employees, types of product handled, and years in business.

Refer to the Checklist For Evaluating Potential Export Sales Representatives (56k PDF) to guide your evaluation. Use this checklist as a basis to create your own checklist oriented to your product line, target market, and selected method of representation. Follow it conscientiously for all your prospective representatives. Carefully analyze and compare the results and use them to select the preferred contact. Keep in mind during this evaluation the prospect's integrity, qualifications, and reliability.

Draft & Execute Agreements

After selecting your representative, the next step is to draft and execute a definitive contract or agreement which will serve as a basis of documenting your understandings and responsibilities. This must be done in concert with your legal counsel due to its importance to the relationship with your representative and your legal liabilities both in the U.S. and in the foreign country.

As a general rule, the following items should be included in every agreement:

• Names, addresses, nature and relationship of parties
• Product description
• Definition of territory
• Exclusivity conditions
• Basis for compensation
• Product pricing agreements
• Sales goals and market share expectations
• Nontransferability of assigned rights
• Confidentiality agreements and understandings regarding prohibitions in dealing with competing products
• Jurisdiction regarding agreements and their enforcement
• Responsibilities for advertising, ordering, inventories and delivery, maintenance, warranty work, and other relevant operating concerns
• Term of the agreement and provisions for modification, cancellation, extensions, or renewal

Consultation with your legal counsel is critical in any written contract. Since legal systems, customs, and regulations differ throughout the world, co-counsel knowledgeable in the practices of the foreign country may also be necessary. Contracts and agreements can be quite extensive but must be as thorough as possible to preclude misinterpretation of intent and subsequent controversy. Due to the dynamics of relationships as well as marketplaces and global politics, modifications will probably be required over the life of the agreement and you should be prepared for that necessity.

Managing and Motivating Distributors

Successfully managing your distributors is a top priority for profitable international trade. If your linkage to international commerce is through your distributor, he or she represents your company. When your distributor prospers, you prosper, if you provide quality products with profit potential. The key components outlined below motivate the distributor to work with you. Always keep in mind that it is a two-way relationship with reciprocal expectations.

Quality Products and Exclusivity

Quality Products

If a product is defective after it is sold, the distributor incurs both a monetary cost and an opportunity cost. The inconvenience goes beyond the time involved to ameliorate return and replacement factors. Regardless of the fact that you will replace the product at no cost, handling defective parts can be very costly in foreign trade due to shipping and duty fees.

Your quality products should be:

1. Trouble free and carry warranties.
2. Unique to the intended target market.
• Modify when necessary and stay ahead of competitors within the target market.
3. Delivered with appropriate, quality packaging.
• Use proper language, colors, symbols and designs that are suitable and inoffensive in your market.
4. Supplied with high quality advertising and sales promotion techniques.
• For example, catalogs, brochures, display cases, banners, window cards, illuminated signs and fliers can be provided in lieu of advertising dollars.
5. Accompanied by easy to understand user manuals, information or instructions.
6. Patent or trademark protected.
• It is your responsibility to take legal action against counterfeit merchandise brought into the target market and ensure your product will not be illegally imitated.

Exclusivity

Your distributor will want exclusive rights to your product with full control over his or her geographic territory. However, you cannot guarantee that sales to third or fourth parties in the United States will not find their way into foreign markets. You cannot terminate an agreement with a U.S. customer simply because they resold your product in a foreign market.

One way to counter the inability to guarantee absolute exclusivity is to offer lower, preferential prices. You can also make a commitment to work with the foreign distributor to resolve problems of interference from competitors while discussing exclusivity of your product in advance.

Sales, Prices and Profit Potential

A good distributor will have business expansion plans. Focus on the distributor's sales, not his purchases from you. Increasing sales and profit growth are essential to business expansion. Accurate sales records signal market trends and slumps that help you stay ahead of the rest of the competitors in the marketplace. Compare sales growth records to other market indicators such as inflation, GNP, and data on consumer purchases.

Motivate your distributor with reasonable payment terms that include periodic requests for payment delays. Temporary payment terms during an economic slump or natural disaster is an effective way to build good will and establish loyalty.

Managing advertising and sales promotions is also a critical factor of basic planning and forecasting. With your assistance, your distributors should develop periodic marketing plans. A marketing plan is necessary from your distributor so you can properly plan for advertising, sales promotions, and seasonal buying patterns. You can help your distributor plan for special sales and new product introductions as well as competitive trade-in programs.

Pricing

Sales and profit potential are the responsibility of the distributor. It is his responsibility to know the unique characteristics of his territory and be able to sell your product profitably within the existing system and methods of his market. In return, the distributor expects you will offer him the lowest price possible because:

1. The best competitive advantage in the market place is the lowest price.
2. He will have to take on some of your normal selling costs.
3. Your product accumulates additional price increases as a direct result of overseas transportation, duty and distribution fees.
4. Price discounts can be based upon the annual sales volume by the distributor, a single, large purchase order, cash payments, or large contract/sales opportunities.

Effective Communications

Effective communication techniques can build strong overseas relationships. Two important communication factors to consider when managing and motivating your international distributor are:

• Your personal relationship with the distributor. Establish a rapport with the top person of the distributorship. That person has the power to make major decisions and effect change.
• The cultural differences between countries. This includes socially acceptable practices, work ethics, language, religion, business ethics, attitudes, and values. Successfully working in an environment with cultural differences requires patience and a willingness to understand different cultures.

Periodic Visits

Overseas travel is very important, in fact, the only way to fully understand your foreign target market and foreign distributor is to visit them regularly. Relying on electronic or written communication can negate the factual evidence provided by on-site visits, research and interviews.

Every distributor expects you to visit their market, he or she may also expect your technical experts, developers, and managers to visit as well. Spend several days learning about the problems and opportunities in that particular market. Utilize direct sources of information, attend trade shows, visit with top management, and be sure to include some contact with the end customer.

Updates

Establish a communication plan that:

• Keeps your distributor informed.
• Provides periodic new information about your product, company or industry.
• Follows the 24 or 48 hour rule of responding. Always get back to inquiries and complaints within two days.
• Avoids miscommunication by providing frequent information regarding invoicing, commissions, competitive updates and market analysis.
• Informs your distributor of primary sources of help and information for opportunities with specific products.

Correspondence

Frequent communication is essential between you and your foreign distributor. A vital component of communication is quick response. The worst action you can take in international trade is no action. Timely and accurate administration of correspondence is expected not only with you but also your co-workers and managers. It can be in the form of:

• Personal visits
• Phone
• Facsimile machine (fax)
• Mail
• Electronic communications (Internet via e-mail)
• Telecommunications

The most widely accepted language is English, however for most of your distributors English will be a second language. This makes effective communication a requirement to overcome language differences.

Training

Training support and materials will be expected by your distributor for the operation and sales features of your product. These materials can take many forms. Pamphlets, fliers, manuals, videos, onsite training visits, and slide presentations can be especially useful. Sales force training should include product and application knowledge, sales skills, and basic market research elements that identify customer profiles and product competition.

The same support expectations apply towards after-sales service and repair methods. Technical training to support after-sales service in the exporting country should include:

• Troubleshooting
• Repair and Testing Procedures
• Repair and Complaint Reporting
• Warranty Program

After-Sale Service

When considering service options, there are three basic options for providing after-sales support:

1. Train and assist your distributor to provide service.
2. Train an independent agency to provide service.
3. Relocate your own staff to service the foreign market.

These after-sales service departments can be structured to be profitable depending on market factors. However, a fast and efficient service operation will reduce additional costs to the end user while keeping a competitive advantage in the foreign market.

It is to your benefit to have a flexible and swift repair system. Plan for spare parts and replacement items which may cost your distributor in the form of additional freight and/or duty fees.

Collaborative Work Effort

Motivating and managing your distributor should generate a two-way relationship. There are certain services and responsibilities you expect from your distributor and the distributor in turn expects certain services and responsibilities from you. Working together or "partnering" can be beneficial from both sides. Use the following managing and motivating themes to build a collaborative relationship.

• Work with the distributor on a regular basis. Avoid surprises, review sales figures and inventory data on a regular basis.
• Develop a marketing plan every year with your distributor. Jointly work on periodic reviews and revisions of the marketing plan.
• Schedule international sales meetings when necessary for new product launching or other special events.
• Ask for new product ideas from your distributor. Modify your product accordingly to stay competitive within the market.
• Try to work out differences. Changing distributors can be costly and lead to the end of product representation in that market.
• Be flexible, blend your management style with your distributor's when necessary.
• Be honest and sincere when interacting with your distributor.

Recognition and Sales Conferences

Recognition

Methods of motivating and encouraging your sales staff require special consideration for your overseas distributor. Rewards, incentives and recognition may take many forms, but consistent periodic recognition is essential for a positive overseas sales environment.

Depending on the nature of your foreign market, some methods of recognition might include:

• Print based recognition in the form of a prestigious plaque or certificate, announcement in the company newsletter, or recognition in the annual report or company profile. Use first names and business titles in the recognition.
• Trips could include vacations with spouse or family, a visit to the company headquarters, or to trade shows, conferences and/or sales meetings. Some distributors may respond well to travel awards like golf or skiing.
• Bonuses might include a cash award for personal recognition or an annual increased based on performance.
• Entertainment, inclusion of spouses, and gifts of value might be an appropriate recognition in some countries. Records kept regarding preferred entertainment, favored restaurants or popular sports are useful. Keep a record of gifts presented in the past to avoid future duplication.

Notes on proper protocol will serve as the basis of your personal recognition program for your distributor. You must be very careful to set up rewards that are acceptable to the culture, customs and preferences of the foreign market your distributor represents. Sensitivity to the unique cultural attitudes towards a reward system will help build a sincere relationship of trust and friendship.

Sales Conferences

Sales conferences are an excellent source of motivation. They serve to inform, recognize sales efforts, and create new energy and enthusiasm. Your distributor will want to learn market updates, current product information, competitive sales programs, and new sales techniques. It also allows the distributor to meet with other sales staff or distributors of your product and exchange ideas and useful tips.

Pursuing International Bid Opportunities

One area that is frequently overlooked by U.S. businesses, except for our multinational giants, is the opportunity for bidding on international projects. As these become more prevalent and technology oriented, the aware manufacturer and service provider will find the arena quite profitable. The contacts and sources used here are also useful for finding trade leads, locating potential purchasers and partners, and obtaining market information. Therefore, they should not be overlooked by anyone seeking to enter the export market.

The primary organizations that are involved in the international bid forum are multilateral development banks (MDBs), the U.S. Agency for International Development, the United Nations, and a number of miscellaneous agencies and programs.

Multilateral Development Banks

A Multilateral Development Bank (MDB) is partially a development agency and partially a bank. It obtains its funding from contributions from a number of nations, hence the term multilateral. The U.S. government is a substantial contributor to most of the active MDB's. The purpose of the MDB's is to provide a funding source for less developed countries (LDC) that otherwise may not have the ability to borrow for needed projects.

As a lender to the LDC's, a multilateral development bank can then promote long-term and stable growth in those countries. It can also coordinate sound financial decisions and provide oversight to the LDC's and the developments that are the basis of the MDB loans. Therefore, a MDB is both a contact and conduit for you to research and bid on those contracts and subcontracts that will arise from MDB-funded develU.S. Department of Commerce. The five principal multilateral development banks are: the World Bank, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development.

• World Bank
• Inter-American Development Bank
• Asian Development Bank
• African Dev in touch with as many as possible.

  The MDB Project Cycle

  Become involved in the MDB project cycle as soon as possible to establish your interest and explore opportunities. The following are the cycle phases which are similar for all MDBs and require 12 to 27 months fr a one to two year process where detailed plans are developed and is a time when bid participants and contractors start their initial involvement including possible contracts for design and engineering work.

• Appraisal - Appraisal is the stage where the MDB staff fine tunes the projecfter loan documents are executed. At this point the MDB continues its oversight and encourages the competitiveness of international bidding by the prime contractors.
• Evaluation - Evaluation is the final stage for the MDB and is a review of the project and has some impact on the direction of determining future projects.

Participation in MDB Financed Developments

To participate in a MDB project, keep track of the MDB publications, relevant private sector publications, and maintain contact with DOC facilities and liaisons. You can also locate bidding agencies in targeted markets since it is the local entity that provides bid details. Get involved as soon as possible, no later than the time the MDB loan is authorized.

Previously, typical MDB-financed projects were for large infrastructure development. This has now shifted to those more concerned with technology, health, communications, and the environment. A current estimate is that MDBs are funding nearly forty-five billion dollars to 150 developing countries around the world, a substantial market.

U.S. Agency for International Development

The U.S. Agency for International Development (AID) administers a program of economic assistance programs that combine assistance to foreign countries with definite needs and at the same time, promotes U. S. national interests. These include promoting open and democratic societies and the improvement of lifestyles and health standards.

Most AID activities are centered around AID missions which identify specific areas of need which is then reported to the Mission Director, then Ambassador, and eventually the Secretary of State. Firms interested in working with AID should obtain The Guide for Doing Business With AID from the government printing office. This give a detailed description of their programs and procedures.

Opportunities exist for commodity sales, contracts for project consulting services, and a variety of products. As with MDB programs, AID projects are either financed or under oversight by the agencies and the actual contracting is done by the foreign country or agency.

Other Agencies and Programs

Trade and Development Agency

The Trade and Development Agency (TDA) is a new agency and it is the only one providing feasibility study grants for overseas projects. These grants are made to the foreign country with the condition that the contracts given out be with U. S. companies. Often the projects investigated for feasibility by this agency can turn out to be quite substantial, such as communication networks and airports.

To track TDA activities, look for Requests for Proposals in Commerce Business Daily or subscribe to TDA Bi-weekly or TDA Early Bird by calling (703) 875-7447.

United Nations

The many subgroups and advisory groups within the United Nations are of themselves a large customer. Some of the more prominent are the United Nations International Children's fund (UNICEF), UN Educational, Scientific, and Cultural Organization (UNESCO), the World Health Organization (WHO), and many more. You should obtain the General Business Guide to the United Nations if you are interested in pursuing this avenue.

Defense Security Assistance Agency

Additional opportunities are available for defense and military oriented exporters which are under the Defense Security Assistance Agency (DSAA) if US funds are utilized. This agency's procedure can be found in Department of Defense publications Security Assistance Management Manual (DOD 5105.38M) and The FMS Financial Management Manual (DOD 7290.3M) available from DISAM, Building 125, Area B, Wright Patterson Air Force Base, Ohio, 45443.

Traveling To Overseas Markets

Careful planning and preparation will maximize the effectiveness of your overseas trip, minimize your expenses and make efficient use of your time. Travel plans should take into consideration the normal work days and business hours in the country to be visited and be scheduled around foreign holidays, international vacation schedules, and religious holidays. Obtain World Commercial Holidays, published yearly in Business America, from your DOC office for more detailed information.

Keep free time in your schedule to allow for unplanned meetings and unexpected circumstances. Use extra time for research, planning, telephone contacts, or summaries of prior meetings. Take time to shop the competitive market, gain insight to business opportunities, and orient yourself to economic realities.

Travel Documents and Medical Preparation

Travel Documents

Obtaining a valid United States passport is your first priority. It is required for all travel outside the United States and Canada. To obtain a passport, citizenship is required along with proof of identity, two identical passport photos, a completed application form and fees.

U.S. citizens who travel to a country where a valid passport is not required will need documentary evidence of their U.S. citizenship and identity. Proof of U.S. citizenship includes an expired passport, a certified (original) birth certificate, Certificate of Naturalization, Certificate of Citizenship, or Report of Birth Abroad of a Citizen of the United States.

Many countries require a visa. A visa is an endorsement or stamp placed by officials of a foreign country on a U.S. passport that allows the bearer to visit that foreign country. Plan on two to three months in advance for processing of your application, photographs, and visa. Apply for a tourist or multiple entry visa. It is more easily obtained than a business visa which is unnecessary unless you plan to physically sell, transfer goods, or earn money. Securing a visa from some countries can be a difficult task. Some countries require an invitation from the business contact in that country.

An international drivers license is a separate document and does not replace the need for a valid U.S. driver's license. More information can be obtained from the Office of Passport Services in Washington, D.C. (202-647-0518)

For more information on entry requirements by country, check the U.S. Department of State,1995 Foreign Entry Requirements - "Tips for Travelers" series. Released by the Bureau of Consular Affairs, March,1995.

Medical Preparation

Check with health care providers and your records to ensure immunizations (e.g. tetanus and polio) are up-to-date. Preventive actions are the best protection against most health risks involved in traveling abroad, especially in developing countries. The most common risk is for traveler's diarrhea, which can be treated with either antibiotics prescribed by your physician, Pepto-Bismol liquid, or Imodium AD.

Some countries may require International Certificates of Vaccination against yellow fever. A cholera immunization may be required if you are traveling from an infected area. Vaccinations against Hepatitis A, polio and meningitis are also available. Investigate the need for immunizations or other preventive medicine against regional diseases you may encounter. Some of these treatments must be started weeks before you begin your trip. No immunizations are required to return to the United States, but requirements for vaccinations differ from country to country.

Some medical problems can be prevented before departure. Check with the U.S. Public Health Center (404-332-4559) for facts related to health conditions in the country you will be traveling to. Detailed health information is included in Health Information for International Travel, available from the U.S. Government Printing Office.

Follow these traveler help tips, so you stay as healthy as possible on your trip:

• Adopt sound eating habits. For example, don't eat uncooked foods, do peel your own fruit, and make sure all food is steaming hot when served to you.
• Rest before you go, but also plan a few days of rest and relaxation during your travels.
• Take extra quantities of any prescription medications with you. Be prepared for uncontrolled events, pack one lot separately along with a duplicate perscription.
• Bring your own brand of aspirin, anti-diarrheal, and antacids.
• Keep emergency telephone numbers and telephone tokens at all times. These numbers might include U.S. Embassy, foreign distributor's home phone, police, travel agent, or your medical insurance identification and phone number.
• Plan a course of action for your family to take in case of an emergency while you are traveling and always keep your family informed of any changes in your itinerary.
• Be aware of business, social, and cultural patterns to assure your compliance with the accepted customs of the country your are visiting.
• Bring a first aid kit which includes band aids, gauze, scissors, tweezers, tape and a topical ointment for minor abrasions.
• Bring Sunscreen with a SPF of at least 15. In addition, use insect repellents containing at least 30% DEET where mosquitos are present.
• Pack a decongestant for colds and sinus congestion, along with aspirin and/or ibuprofen. Motion sickness can be helped with Dramamine tablets.
• Pack an extra pair of sunglasses and prescription glasses or contacts.

Having proper documentation and staying healthy are important as you make your trip overseas, but it won't do any good if you don't know anything about customs and traditions in the country to which you are traveling.

Cultural Factors

Understanding and respecting cultural, social, and business customs will prepare you for the flexibility needed to adapt to profitable international business ethics and practices. Lack of cultural awareness can be detrimental to the success of a company's position in the foreign market. Wells (Exporting from Start To Finance, 1995) suggests a quick, in-flight review of the Culture Grams, developed by Brigham State University's Center for International Trade. Over 100 countries and their special cultural considerations are identified in separate leaflets. Bookstores and libraries are also an excellent resource for historical and cultural information.

Read the following for additional tips on international customs within your target market.

Target Market Distinctions

The Checklist For Your Overseas Trip (50k PDF) includes specific marketing data that should be considered for your overseas visit. Determine the cultural differences of each market when evaluating information incorporated in the checklist documents. Proper knowledge of business manners and methods for your target market will insulate and protect the transmission of your company goals, objectives and business agendas.

Use foreign country marketing plans to compare social customs within potential markets before engaging in business conversations. Pay close attention to business styles, cross-cultural communication, and the degree of importance a foreign distributor places on developing business relations.

The potential of your foreign market can be maximized by using marketing resources to obtain a better understanding of consumer buying habits, business practices and management cultures.

Cultural Business Variables

Cultural sensitivity is critical to the success of your international travel. Let your host set the tone of your initial meeting. Pay close attention attitudes towards gift-giving, accepted form of greeting, business relationships, small talk and smoking. Misunderstanding these customs may embarrass both you and your host. If there is a language barrier, be sincere, but let the product speak for itself.

International business executives often carry confusing titles. When meeting your prospective customer or distributor, be careful interpreting the correct use of business titles, surnames, and first names. There is often a distinction between formal occasions, business meetings, and written communications.

Cultural Negotiating

There are additional characteristics and approaches to consider when negotiating international business deals. Wells (Exporting from Start To Finance , 1995) confirms the availability of the many principles, details and nuances you can use. The best strategy is to study what you can, when you can, with attention to logical priorities based on the importance of the deal and the immediacy of the need (Wells, Exporting from Start To Finance , 1995). Even though you may never perfect your cultural style for each foreign market, major offenses can and should be avoided.

Before you make your overseas trip, certain negotiating tactics, business fundamentals and issues should have been discussed with your company. Know these basic issues and how far you can deviate from the agreed upon concepts. Be aware of the least amount you can agree upon as well as concessions you can make during negotiations. Don't lose sight of the ultimate goal, make a deal that is best for you, your company, and the distributor.

Travel Tips

• Change money at the airport of entry, it is usually better than the rate at your hotel or from an inner city bank.
• Plan ahead for a translator or hotel operator to help make telephone contact to confirm or schedule appointments.
• Try and skip taxis as your method of transportation from the airport. Arrange for hotel/airport transportation in advance. Taxi rates are usually higher and operators can be intimidating.
• Select business, deluxe or first class hotels that offer business services for patrons. These services can include communication systems, translators, and general business information that relates to your target market.
• Try to travel with others when possible.
• Make a list of all the documents you are carrying in case of loss or theft. Have all the applicable numbers ready for replacement purposes. For instance, photocopies of your itinerary, reservations, passport, medical and eyeglass prescriptions, airline tickets, traveler's checks, and credit cards are recommended.
• Proper clothing, sunscreen, and insect repellent is very important, not only for comfort, but to avoid more serious health hazards.

Your conduct during negotiation, overseas travel and even your choice of hotel characterize the image you portray for your company and product you are trying to sell.

Promoting the Product

In order to sell your product overseas, it is necessary to advertise. The advertising effort actually begins at home, as you make your first contacts with potential overseas representatives and introduce your company and product to target markets. In these early stages, you are beginning to establish your image This image is further refined by your negotiation and selection of your designated representative. Your conduct during negotiations and during foreign travel, even your choice of hotels, will characterize the image you are presenting.

There are two major considerations that must be addressed early in your selection of an advertising program. First, you must decide who will control the advertising campaign, you or your overseas representative. Second, you must evaluate and implement the most appropriate methods. Click on one of the following for further information.

Frequently, there will be no "black and white" result from your evaluations. The promotional effort is often a collaboration between the exporter, his representative, and an advertising agency. A variety of advertising methods may be utilized to reach different aspects of the selected market.

Campaign Control

The promotional campaign can be either centralized (under direct control of the exporter) or decentralized (under the control of the overseas representatives). Each method has its advantages and disadvantages.

Centralized promotional efforts:

• Control of all promotional efforts, logos, advertising messages by the exporter.
• Uniformity of the company image and advertising message to all markets.
• Economies of scale in maintaining one headquarters operation, minimizing duplication of efforts.

Decentralized promotional efforts:

• Each market is different and local experts may have the best understanding of it and the best methods to promote the product.
• U.S. ad agencies may not be strong or experienced in some overseas markets.
• There is more flexibility in the selection of local advertising agencies.
• Local regulations, customs, and taboos are more clearly understood.

As a beginning exporter, you will probably use the decentralized approach because you will be starting in one or a limited number of markets and require local expertise.

As your markets expand or become more numerous, a more centralized approach with greater control and potential cost savings will become feasible. US advertising agencies can often affiliate with local firms to assure knowledge of the local market and effectiveness of the promotional effort. Larger US companies such as Coca-Cola, Kodak, and IBM prefer this approach which gives them maximum control.

No matter which means you select, close collaboration with your representative and constant communication is essential not only in determining the focus of your marketing effort, but also in monitoring and evaluating it.

Once you determine who has control over the advertising campaign, you'll need to decide on the appropriate means to promote your product.

Means of Advertising

A variety of methods and agencies are available to assist in your marketing effort, many of which you may be using in you domestic efforts. However, there are a number of methods that will help you advertise internationally. Some may be best utilized in a general sense, while other may be focused and specific to selected target markets.

The following list represents the major methods:

Direct Mail

The most time-tested and common method of advertising for smaller exporters is through a direct mail campaign. You may even be conducting your direct mail campaign ahead of, or as part of your effort to locate an overseas representative.

Leads for direct mail can come from foreign trade and technical journals, trade association publications, responses to advertisements, or subscriber lists. Subscriber lists are often available from the publications, list brokers, or from direct mail consultants. Trade shows and the contacts generated can also form a source of mailing lists.

A specific mailing list of screened prospects is prepared by the Department of Commerce through its Export Contact List Service. The DOC prepares mailing lists of prospective customers from its automated worldwide file of foreign firms. Information regarding the firms selected includes key contacts as well as addresses and telephone numbers.

Media Advertising

Media Advertising is broader in scope than other methods. Television, video, and radio are general in their scope but well adapted for consumer products. A more specific approach, particularly for commercial products, is available through print media oriented towards specific markets such as the following:

• Trade Journals - Many foreign buyers find business through advertisements in trade journals. Obviously, this provides a screening function to narrow the focus of an advertising campaign.
• Commercial News USA - This US&FCS publication and EBB promotes American products overseas by distributing it to consulates and embassies. CNUSA reaches up to 110,000 potential buyers.
• Buyer Alert - A weekly newsletter mailed by the Foreign Agriculture Service to promote food and agricultural products.
• Trade Association Newsletters and Publications - Not only can US trade association publications be used to promote your product, but also their foreign counterparts.

Whenever media advertising is used, make an effort to have it translated effectively in the local language, if possible. Screen it for conformance with the foreign country's customs, regulations, and note taboos or idiosyncrasies.

Trade Fairs, Trade Missions, and Catalog Exhibitions

There are several levels of international events and organized trips held both in the U.S. and abroad. These are frequently organized by state and U.S. government agencies, as well as trade associations and Chambers of Commerce. Some of the more prominent programs are:

• Industry-organized Domestic Fairs and Exhibitions - Most major industries in this country have their own organization, many of which arrange regular exhibits of their member's products and services. Many attract potential buyers from around the world.
• Trade Shows and Trade Missions - Organized by the DOC, Chambers of Commerce, or trade associations, trade shows are an excellent opportunity to showcase your company and products as well as make valuable contacts.
• Matchmaker Events - Often oriented to new-to-export firms, matchmaker events attempt to more closely align the exporter to prospective contacts and markets.
• Catalog Exhibitions - Catalog and Video/Catalog exhibitions are a relatively low cost method to advertise your product abroad.
• Other DOC programs - The DOC has a number of other programs, including those of the Export Development Office, Major Projects program and Textile and Apparel Export Expansion program. Contact your local DOC office for further details.
• Department of Agriculture Programs - The USDA also has a variety of programs to promote your exports including its Commodity and Marketing programs, High Value Product Services Division, and AgExport Connections.
• AgExport - connections provide trade leads, buyer lists, and publishes a weekly newsletter called "Buyer Alert" which advertises US products.

Careful planning and follow through are necessary when using methods requiring overseas travel due to the expense. The right event must be selected, materials and translators prepared and adequate follow-up assured.

Multilateral Development Banks

A number of firms have entered foreign markets by bidding on or subcontracting to bidders of Multilateral Development Bank projects. This has as its advantage a large degree of exposure while offering opportunities for immediate business. There are five main Multilateral Development Banks and their activity level has increased significantly in recent years.

Depending on your marketing objectives and stage of your promotional effort, you may be utilizing several or all of these avenues, particularly as market penetration increases.