Export News: How to create a competitive and export-ready business

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An exporter operating in the international trade arena is often tasked with a range of responsibilities, trade compliance, cumbersome procedures and other crucial activities that he must perform to the best of his ability before sending any goods or services. overseas services. To stay on track and win in the business world, exporters should ideally write a checklist. Whether it is modifying the product to suit a particular market, assessing the risks involved in the export process or defining the responsibilities of the parties involved, exporters must always be on their guard. They should also consider the following essentials before shipping their shipments:

Loading / unloading the shipment

Under Delivered Duty Paid (DDP) Incoterms 2020, which is one of the 11 trade terms in the series of incoterms (international trade terms) published by the International Chamber of Commerce (ICC), the loading and unloading of goods, its costs and associated risks are the responsibility of the seller. Here, the exporter is responsible for loading the goods from the place of origin and ensuring that they reach the destination safely. The end point may be the domicile of the importer, a warehouse, a port or any other area agreed to by both parties.

According to the DDP Incoterms, the procedure for loading and unloading shipments takes place in three phases. The first step is to load the goods and transport them to the port; the second step is to unload the goods and prepare them for shipment, the third is to load the goods for shipment. According to these incoterms, the exporter has to make DDP expenses such as packing / loading costs, transport / delivery costs, transport costs, terminal / loading costs to port, insurance costs. / customs and customs clearance fees (both for export and import).

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Whether you are an importer or an exporter, make sure you understand the different Incoterms so that the responsibilities of both parties are clear during the international transport process.

Modes of transport

According to the United Nations Conference on Trade and Development (UNCTAD), around 80% of world trade by volume and over 70% of international trade by value is carried by sea. In addition to maritime trade, goods can be shipped by road, rail or air, depending on the nature of the product and the shipment requirements.

The means of transport are crucial for the profitability and efficiency of the exporter. Salespeople should focus from the start on the type of transportation that best suits their needs. The speed being directly proportional to the cost of delivery, the choice of transport must be made taking into account the cost-benefit factor.

At this point, exporters should consider the current supply chain disruptions that have driven up freight costs and resulted in a shortage of containers, which can hamper their business strategies. Whether deciding on the type of containers, opting for a full container (FCL) or a lower container (LCL) depending on the delivery time, import destination, volume, weight and of the quantity of the shipment, an exporter should plan the logistics requirements.

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Product adaptation

Sometimes you need to modify your product for a variety of reasons, such as to meet the buyer’s preferences, to meet the packaging and labeling guidelines of the importing country, or to meet the legal requirements of the foreign country. For example, if you want to sell clothes in the European market, you have to comply with several legal and non-legal requirements. According to the Center for the Promotion of Imports, Ministry of Foreign Affairs of the Netherlands, the best-known legal requirement for the export of clothing to the European Union (EU) is “Registration, evaluation, authorization and restriction of products. chemicals (REACH) ”. In addition, according to industry standards, any item for sale in Europe must comply with the European General Product Safety Directive (GPSD) 2001/95 / EC.

While this information is specific to a particular industry and niche market, a seller should have a thorough understanding of all industry related regulations and interact with the buyer before starting production to avoid confusion and loss. . When planning business strategies, you need to keep the market potential in mind and make a conscious decision as to whether the costs of adapting the product are profitable or not. The seller must also mention to the buyer the product warranty and installation instructions, if applicable.

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Risky geographies

Risk management allows a company to pursue an export activity only if the associated risks are lower than expected market opportunities. Considering this, a country’s risk analysis should be done before confirming the potential market for your products for various reasons. One being that exporters need to know the credit performance of the geographic areas to which they plan to ship their goods. This will give them an idea if and how they will be paid on time. Often, it may happen that specific geographic areas have poor financial infrastructure, resulting in inefficiencies and late payments. However, even beyond credit issues, if geographic areas experience geopolitical tensions (as in Afghanistan now), it can cause immense delays and disruption to the supply network and business plan of the. exporter.

Buyer history

It is equally important to understand a buyer’s history in international trade, as it helps the seller understand which countries and products a particular buyer usually deals with. It further helps the exporter to study buyer’s risk and payment cycles to understand the reliability and consistency of when the exporter will be paid. Second, since the buyer is mostly a foreigner from a foreign country, it is beneficial to know the buyer’s default rate. Only then can a conscious decision be made whether or not to take care of them. From a market point of view, it is always good to study the buyer’s trading manners from what the people in the market have to say about them.

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Assurance

Export credit insurance in India is designed to protect the claims of an exporter. The main role of the program is to provide a variety of risk insurance products that cover losses and bad debts on exports. Marine insurance is one of those products that exporters can choose from. This type of insurance covers loss / damage to ships, cargoes, terminals and includes any other means of transport by which the goods are transferred, acquired or held between the points of origin and the final destination.

Conclusion



Exporters who keep abreast of market trends, build good relationships with their buyers, and have the basic knowledge of global trade are likely to be successful in this highly competitive field. After following this checklist carefully and compiling all the necessary documents, you can expect to be ready to export. Good luck!

(The author is CEO / co-founder of Drip Capital)

(The one-stop destination for MSMEs, ET RISE provides news, insights, and analysis on GST, exports, finance, politics, and small business management.)

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