Explore and Adopt an Export Strategy
May 01, 2017 09:04PM
● By Makayla Gay
By Karen E. Thuermer
Specialized Content Sponsored by South Carolina Ports, Upstate SC Alliance and K&L Gates
While many people believe that exporting is risky, costly and requires hiring related experts, there are ways to mitigate risk and manage costs.
Nicole Johnson, co-owner and vice president of sales of Boyd Cycling in Greenville, reveals that she has taken advantage of the U.S. International Trade Administration’s Gold Key Matching Service to help her small company expand around the world.
“They help you figure out what markets are viable, obtain local intelligence about what is happening in those countries, and arrange appointments with potential companies with whom you should connect,” she says.
Boyd Cycling took advantage of the program when attending Eurobike, the world’s leading bike fair.
“They connected us with distributors who met us at the show.”
The service also provides interpreters, counseling regarding shipping and export financing. “This has helped us save a lot of money in potential pitfalls,” Johnson says. “Anytime you try to expand your company, it can be costly. We are not in a position where we have a lot of cash laying around to do that. We have to expand very methodically. Calculated risk is our scenario.”
One of the most important factors to exporting is employing a good freight forwarder.
“Through the years, we have run into some who are not, and that really hurt us,” Johnson says.
This resulted in shipments sitting overseas for over a month because they didn’t get processed correctly.
“It’s equally important to know you cannot be an expert at everything,” she says. “Networking and utilizing resources that available, such as the Upstate Alliance and Greenville’s NEXT Innovation Center, which offers flexible office space, have been helpful in connecting us with the right people.”
While exporting has not doubled Boyd Cycling’s business yet, Johnson is confident it will.
“It cannot happen overnight. But we are hoping exporting will allow us to be more competitive in the market place,” she says. “Exporting gives us credibility. Showing that you can play in the international field is advantageous to your brand. It says a lot.”
Diana Pet Food utilizes resources available through the Greenwood Partnership Alliance.
Laurent Barbotin, general manager, reveals that the Alliance has been good at bringing non-competing companies together to discuss exporting and share resources such as recommendations for good freight forwarders.
“We share best practices,” Barbotin says. “A good network helps a lot.”
Phil Patrick, owner and president of Excel Products, praises the Export-Import Bank (EXIM) as being an excellent resource for export credit insurance.
“It’s really important for small exporters,” he says. “While a lot of people believe it is intended only for large companies, a lot of small businesses use it.”
With its global headquarters in Easley, executives at ACL Airshop have learned that growth is directly related to the positioning of equipment and supplies by both exporting and importing. The company has been operating for more than 30 years in the aviation sector and is now an industry leader in short-term unit load device (ULD) leasing, sales, repair, manufacturing and control.
“Exporting the products we manufacture in South Carolina provides the opportunity to promote all of our solutions and services globally,” says Wes Tucker, executive vice president, ACL Airshop. “With today’s business culture being nimble and volatile, it is important to us that we have the flexibility to lean on different regions.”
The company operates on six continents and at more than half of the world’s top 50 air cargo hubs. “Our customers demand an uninterrupted supply chain, and we provide it through multiple strategic relationships in the freight forwarding market,” Tucker says.
Consequently, one of this company’s major points of awareness for exporting is logistics. “We play close attention to transit times,” Tucker explains. “We prepare our stations with inventory and forecast on annual trends in an effort to be proactive versus reactive. Our exact business model is our ability to deliver immediately.”
For those companies that are new to exporting, a lawyer who is grounded in international trade law can be useful when first setting up an export plan.
“I always tell people that exporting is not complicated, but there are some new concepts that you may not have dealt with before,” says Julius “Sam” Hines, K&L Gates LLP partner. Examples are export regulations and uniform commercial codes that govern the sale of goods. For one, the European Union requires a CE marking to a product, indicating that the manufacturer declares the product meets all EU legal and safety requirements.
Having a good contract is critical. “Companies need to be aware that when you are doing business outside U.S. borders you are in a limbo area in respect to the legal regime with which you are doing business,” Hines adds.
In shipping, issues regarding delivery can be one of the biggest issues a company faces. “You need to be clear on how products are going to be delivered and who is going to be responsible for the cost of delivery and paying Customs duties,” he says. “Such terms need to be nailed down carefully in a sales contract and such costs also need to be included when setting a sales price. Are you getting paid in U.S. dollars? How do you protect against currency fluctuations?”
Means of payment must be addressed, especially since exporting means dealing with a customer in another country. “One way,” Hines says, “is a commercial letter of credit.”
Plus there’s the issue of currencies. Banks that offer international services can help with currency conversion.
“If you get your bank to protect you from currency fluctuation risks so you can do business in your customers’ currency oftentimes you end up doing better than doing business in US dollars,” Hines adds. “Consultants are also helpful.”
Ford Graham, an attorney also with K&L Gates LLP, advises new customers to never sell on an open account. Graham, previously managed international recruiting efforts for the S.C. Dept. of Commerce and led global investment strategy for the state.
“It’s best to start with small increments,” he says.
While large companies have employees dedicated solely to export activities, small and medium-size businesses need to dedicate time to learning the ropes.
“The good thing is there’s a lot of support,” Graham says. “If you are starting for the first time and have a product you think you want to export, you can approach resources such as the South Carolina Small Business Development Center that will help put an export study together, evaluate your company and your product for export readiness.”
After all, exporting takes time and patience.
“Take baby steps,” Graham advises. “Plan on 18 months to two years to have your research done and know where your sales will be. Also know the export requirements for each country. Once you understand this, you can expand to multiple countries. But it is not instantaneous.”