Since you are reading this, you probably want to start an export company or want to start exporting the

goods that you manufacture, outside India and enjoy the high profits of exports!
This guide will show you how to do this.
However, before we go into "How to export?", let us try to understand what exports are all about and
whether you and your company are in a position to benefit from exporting.
So, the next question is:
Is exporting for you?
Exporting requires, some amount of commitment, certain resources, capital and a good understanding of
the risks involved. In the first section of this article we have talked about these things.
After having read the first section of this article, you will have a much more clear picture about what goes
into exporting and whether you and your firm should go in for it?

Since India is such a large county, with so much diversity, "exporting", is just like selling in India! The
basic steps are almost the same.
Basi c Steps
You have a product or service to sell.

Your customers vary in their race, religious, culture and language.
Your have to market to different regions with different seasons and physical environments.
You do market research to understand your customers.
You develop a marketing plan to decide your distribution, pricing and promotion strategy.
You market and promote through the Internet, direct E-mail and postal mail, Fax, phone, brochures, press
releases, the ad media, trade shows, etc.
You set up sales and distribution networks.
You provide the required service to your customers.
You respond to inquiries.
You invoice purchasers and get paid!
Note: In the above explanation, we talked about many marketing terms. To understand these better, you
can read our, "How to market?" article. We use these marketing terms thoughout this article, so reading
the marketing article would be a good idea.
However there are some major differences between selling in India, and exporting outside India. Let us
try to understand them!
Di fference In Exporti ng
Exports are often done through "intermediate players" in each country, not directly to end-users:
In most countries, "imports" are generally handled by "local agents" (on commission basis). Another way
in which imports are generally handled is by "importer-distributors", who buy (with their own money)
from the exporters of other countries, and resell to end-users in their country. These intermediate players,
know the market and have contacts with the end-users.
It many seem that having another "distribution layer" between you and your end-users will increase the
cost and be bad for sales. However, good local agents and distributors are actually very valuable when
you are going in for export.
Because of their experience and knowledge in the local market, they are able to develop and send you
sales orders, arrange for payment, prepare required import documents, and clear the delivered goods
through customs and other import formalities. Many are equipped to stock, install and service the goods
too.
The end-users know and prefer to deal with these local agents and distributors, rather than buy direct
from you or other foreign suppliers.
As a new exporter, your best option is to find good agents or distributors to represent you abroad. This is
the best way to start off, at least in the beginning.

Exports usually involve an exchange of currency to pay for the purchase:
The importer pays in his local currency. However, exchange rates between currencies are constantly
fluctuating. If, after he pays you, the value of his currency reduces with respect to your currency, you will
loose money!
To protect against exchange rate fluctuations, you should quote your selling price in a strong currency.
You could also quote your selling price in "Rs." That way, you get the full amount you quoted, regardless
of currency fluctuations.
However, this is not always possible. If all your competitors are willing to except payment in the local
currency then you have no option but to do the same. This is generally the case in a "sellers market"
where there is a lot of competition.

Export sales use different payment methods:
Exporters usually receive payment through a process handled by banks in your country and the importer's
country. The most common method is called the "Letter Of Credit". It insures prompt payment with
minimal free. It's a very simple concept; the importer gives the money in advance to his local bank. The
importer's bank sends these funds to a bank in your country, which pays you, the exporter, when the
goods are delivered.
You can also purchase "export credit insurance" to reduce risks of non-payment.

Different laws and business practices exist in other countries:
Trade, monetary policy; pricing, distribution and promotion; treatment of intellectual property; health,
safety and technical standards, etc. are different from country to country. These laws and practices affect
what you're allowed to do and what you are not allowed to do.
Although many practices are "business friendly" and similar to those in your country, some are obstacles
and risks for exporters. It's best to research each country and look for advise from an international law
firm if needed.

Linguistic, demographic and environmental variations:
These differences, if ignored, can break your sales efforts abroad. Take care not to offend your foreign
customers in the words, symbols and body language you use in your advertising and promotion material
and business negotiations.
In addition, your products must "fit" the market environment -- the climate, terrain, sizes of people and
things, consumer tastes and preferences, etc.

Exporting usually involves many added costs for shipping and insurance of the goods to the importing
country
Exports are subject to customs duties and taxes in the importing countries
The above explanation must have given you a basic idea about what exporting is all about. However,
many companies choose not to export because of certain "wrong ideas" or myths they have about
exporting. Let us confirm that you do not have these wrong ideas...


Many companies do not export at all. Other companies do not export as much as they can. Why do so
many companies not export? The usual reason is "I'm satisfied with the domestic market" or "I'm too
busy with the domestic market to think about exporting." That's understandable in a very large market
like India.
However, this is a shortsighted view. In effect, these companies are saying "I'm not interested in the
additional sales and good profits!" Yet, if asked whether they would not go for a sales order because it
came from abroad, many answer, "Of course not!"
Mainly, people do not export because of fear and ignorance, "I'm too small", "I can't afford it", "I can't
compete", "It's too risky", "It's too complicated." These are myths and misconceptions. All these can be
overcome.
I' m Too Smal l to Export
"Only large firms with name recognition, ample resources, and export departments can export
successfully."
False! The vast majority of exporting firms in most countries are small and medium-sized enterprises
(SMEs). Many have less than 50 employees. It's true that large firms typically account for a huge part of
the total exports, but SMEs dominate the world's exporting population.
I Can' t Afford to Export
"I don't have the money to hire people, market myself abroad, or expand production if I get new export
business."
Not true! There are low-cost ways to market and promote abroad, handle new export orders, and finance.
These don't require hiring new staff or setting up an export department. At little or no cost, for example,
you can get product and country market research, worldwide market exposure, generate trade leads, and
find qualified overseas distributors to represent you.
I Can' t Compete Overseas
"My products are unknown and my prices too high for foreign markets."
Since you are an Indian company, this is most likely NOT the case. The Indian industries are able to
produce goods at a much lower cost as compared to companies in other countries around the world. The
products sold in India, are sold at a fraction of the cost at which they are sold worldwide.
This is because, for a company to be successful in India it has to come up with ways to reduce the cost of
the product it is selling. Until very recently a large part of India did not have a very high buying capacity.
Because of this, if a product was to be sold all over India, the companies here had to innovate and lower
the prices so that the product will not be too costly for the people.
Don't assume your price is uncompetitive. Your products could still be a bargain in strong-currency
countries, even after adding overseas delivery costs and import duties.
So most of the products manufactured in India are very very cost competitive as compared to products
manufactured in most other countries.
Besides that, the world is large, with varied needs and interests. If your product is popular in the domestic
market, it might be wanted somewhere else in the world! What makes your product sell in the home
market can help it sell abroad! Price is important, but it is not the only selling point. Other competitive
factors are need, utility, quality, service, credit, consumer taste - these may override price.
Exporti ng i s Too Risky
"I might not get paid. I might break a law I didn't know about."
Not likely! Selling anywhere has risks. But doing the right things can reduce the risk. There are a number
of insurance programs that help you safeguard against the risk involved in exporting. Besides that, as
explained earlier, the Letter Of Credit etc. can be used to insure payment when exporting.
Exporti ng i s too compl i cated
"Exporting is too complicated; I don't know how."
Wrong! You don't need to be an expert to export. Almost all the complicated parts of exporting can be
outsourced. There are Export Management Companies (EMCs), overseas agents and distributors, who can
represent you, find overseas customers, present you with sales orders, handle all the export paperwork,
and deliver the goods. You fill the orders and get paid for the sale. You pay them a fee or commission.


Competi tive Product
Products won't sell anywhere if they can't compete. To compete, your product must match or exceed the
appeal of others -- in meeting needs, in quality, in price, etc.

Are you export-competitive? You may be export competitive even without realizing it. For example, if your
product has sold well in the domestic market, chances are it will also sell abroad!

Why? By succeeding in the competitive domestic market, you've already proven your product can compete
not only against other domestic products, but also against "imported" products. This is essentially the
same competition you'll meet when you export.

However, you must remember that the overseas playing field will be "different". You may need to adapt
your product and pricing to compete. You may have to absorb added marketing and shipping costs to
remain price competitive. You may have to offer credit and wait longer for payment. You may need to alter
your product to comply with local standards and tastes.

Are you prepared to do what it takes to compete? If not, you won't succeed as an exporter.

Adequate Resources
As with any business, you'll need experienced staff, a location and equipment. It's possible to start with
as little as a home-based office, and a computer, phone and fax. If you're already established, and have
these basic things, you will have to use your resources to research and develop potential markets abroad.

As export orders come in, you'll need enough inventory to fill them, or the ability to produce or acquire
more product as needed. If your customers want delayed payment terms, you'll have to pay for financing.

You CAN minimize these costs and still export, but you CAN'T eliminate them entirely. Do you have or can
you get the necessary resources?

Sound Marketi ng Methodol ogy
How you enter and market in a foreign market is important. Marketing and distribution practices are
different from country to country. They are often controlled by law, custom, or necessity.

Some countries may require or prefer certain marketing or distribution methods, such as direct sales or
use of local agents. Other countries may control or not allow them. Some countries have excellent mass
media and high receptivity to advertising, trade shows, mail order, etc. Others do not approve of these
approaches or do not have the modern communication technologies to support them.

Are you prepared to adapt your marketing methods? If not, you'll need to limit yourself to markets more
like your own.


In this section we shall talk about all the costs involved in exporting. This will give you a clearer picture of
exporting and also give you an idea about the kind of finances that will be required.
Costs of exporting can be kept low, but can't be avoided altogether. If you're just starting, you'll face the
usual start-up costs for an office, furniture, equipment, and supplies. You'll incur some initial "research
costs" to identify your best markets. To enter and develop these markets, you'll have costs to gain
exposure, set up sales and distribution networks, and attract customers etc.
As your exports increase, you might take overseas business trips, do more media advertising, and
participate in trade shows abroad. In some countries, you may have to redesign or modify your product to
meet local requirements or customer preferences.
enerally, the more you spend to prepare, promote, and adapt for export, the greater the return for your
business. But don't be afraid if your funds are limited. You can start even on a limited budget. Some of the
major costs involved in export are:
Empl oyees
You may not need additional employees. One experienced person can handle the work for several clients,
gathering market research, seeking overseas customers, responding to inquiries, preparing export
paperwork, and arranging for delivery of the goods.
If you're already producing a product or service, you can export through an Export Management Company
(EMC) or Export Trading Company (ETC) without adding or training any new company staff. EMCs/ETC's
already have relationships abroad and will incur some or all of the initial costs to find you customers and
generate orders.
Some EMCs and most ETCs also buy goods outright from domestic producers (with their own money) for
resale abroad. You, as the supplier, would get paid right away and would also benefit from exposure of
your product abroad.
If you intend to handle some or all of the export work in-house, you should hire an export manager and
train someone your staff.
Advertisi ng & Sal es Promoti on
If you're a new exporter, you're probably not known outside your country. You'll need to promote yourself
to get overseas exposure.
A company Web site, with company highlights and product descriptions can be your first step. A web
designer can create an attractive site for you, or you can do it yourself. You can register your "dot.com"
domain for a small fee. Because your site may be difficult to find on the Internet, you should also list your
company in one or more Internet/Export Directories. One such directory
is: http://www.infobanc.com/ There are many more such directories on the Internet.
In addition to a Web site and directory listings, you should also have printed materials for mailings,
handouts and responses to inquiries, such as a company brochure, product sheets, etc. Your brochure
could be self-prepared or professionally designed by a marketing firm.
Whenever possible, place free press-releases in industry journals with international circulation.
Higher cost options include paid telemarketing, media ads, and participation in overseas trade shows.


Ri sks due to your own in-experi ence:
Because of your in-experience you might make some very expensive blunders. Make sure you DON'T do
these things:
O Don't try to go for too many markets at once, or the wrong markets.
O Don't use sales advertising, brochures and promotion that offends.
O Don't appoint incompetent overseas representatives that 'can't be terminated'.
O Don't fail to protect your intellectual property.
O Don't agree to payment methods or terms that leave you at risk.
O Don't try to handle all the shipping and documentation yourself. (At least in the beginning!)
O o slow until you gain more experience.

Fi nanci al Ri sks
Your main concern is non-payment after you've shipped the goods. You can largely avoid this by selling on
a Letter of Credit (L/C) basis. L/Cs assure payment because the buyer must deposit the money in advance
at his bank, and a correspondent bank in your country then takes on the obligation to pay you.
However, many foreign buyers ask for delayed payments within 30-120 days after the goods arrive. You
might have to offer this, if all your competitors are offering these terms! Doing so increases your risk. You
can protect yourself with "export credit insurance".
If buyers won't pay, it's usually for one of two reasons:
O You haven't completed the "terms of sale" in their view
O They're dishonest.
You must complete the "terms of sale" as specified in the L/C and the shipping documents. If you don't do
this then it becomes very hard to get paid.
Also, over time you will be able to recognize dishonest buyers. This is something that comes with
experience.

Business Risks
Take effort to learn about your export business partners. Beware of deals that are "too good to be true."
Many of these will be scams.
You must understand that India is not the only corrupt country in the world. In fact, many of the counties
in the world are "much more corrupt". In many countries, corruption is common. The line between what's
customary and tolerable, and what's excessive or illegal, is not always clear. Seek advice from a lawyer.
IMPORTANT: Watch out for firms out to copy your technology once they get a product sample or your first
shipment.
Take special care to appoint good overseas agents and distributors. Some may already represent your
competitors, or be so busy they can't do justice for your products. They may not have the qualifications or
capabilities they claimed, such as the ability to stock, install and service your goods. In some countries,
once you sign an agent/distributor agreement, it's almost impossible to terminate the agreement. Make
sure you do not fall for this trap.

Legal Ri sks
Every country has it's own business laws and regulations. Many may be similar to our country's laws or
follow international standards. Some vary widely by country. Failure to comply could trigger fines or
worse. Take the time to do market research and seek legal advice as needed.

Pol i ti cal Ri sks
Political instability can cause dramatic changes, including major shifts in economic policy, nationalization,
expropriations, loss of personal rights, and physical danger. It can prompt foreign reactions in the form of
economic sanctions, boycotts, and embargoes. Be alert to what's happening in the world. Some shifts can
favor exporters. For example, ongoing shifts toward privatization and trade liberalization in many
previously controlled countries continue to offer opportunities for the world's exporters.
All the information provided in till here, must have given you a good idea about what exporting is all
about. You are now in the position to decide whether your firm has what it takes to export and whether,
you want to go in for exports.
If you have decide to go in for exporting, the next step is to....


Once you have decided to go in for exporting, the next step is to develop a marketing plan.
As you can imagine, many foreign markets differ greatly from India. Differences include climatic and
environmental factors, social and cultural factors, local availability of raw materials or product
alternatives, lower or higher wage costs, varying amounts of purchasing power, the availability of foreign
exchange, and government import controls.
To handle all these changes, a marketing plan is required.
Why wri te a marketing pl an?
A clearly written marketing plan offers six immediate benefits:
Written plans are not easily forgotten, overlooked, or ignored by those who are made in charge of
executing them. If deviation from the original plan occurs, it is probably due to a deliberate choice.
Written plans are easier to communicate to others and are less likely to be misunderstood.
Written plans allocate responsibilities and provide for a way in which results and progress can be
measured.
Written plans are helpful when you have to approach banks and other organizations for financial
assistance. They indicate to lenders that you have a serious approach to the export venture.
Written plans give your companies management a clear understanding of what will be required of them.
But, before writing a marketing plan, some market recearch is to be done. We have provided a step-by-
step guide to market research for exporting.
To successfully export your product, you should study foreign markets. You need to do this, to identify
exporting opportunities and "constraints" abroad, as well as to identify prospective buyers and
customers.

Market research basically is all the methods that a company can use to determine which foreign markets
have the "best potential" for its products.

The market research is generally used to find out the following information for a company:
1. The largest markets for its product
2. The fastest growing markets
3. Market trends and outlook
4. Market conditions and practices
5. Competitive firms and products

Sometimes, you may begin to export without conducting any market research if you get many unsolicited
orders from abroad. Although this type of selling is valuable, you may discover even more promising
markets by conducting a systematic market research.

A firm may research a market by using either "primary" or "secondary" data resources.

In conducting primary market research, a company collects data "directly from the foreign marketplace".
This is done through interviews, surveys, and other direct contact with representatives and potential
buyers. Primary market research has the advantage of being as per the company's needs and provides
answers to specific questions, but the collection of such data is time-consuming and expensive.

When conducting secondary market research, a company collects data from various sources, such as trade
statistics for a country or a product. Working with secondary sources is less expensive and helps the
company focus its marketing efforts.

Although secondary data sources are critical to market research, they do have limitations. The most
recent statistics for some countries may be more than two years old. Moreover, the data may be too broad
to be of much value to a company. Statistics may also be distorted by incomplete data-gathering
techniques. Finally, statistics for services are often unavailable.

Even with these limitations, secondary research is a valuable and relatively easy first step for a company
to take. It may be the only step needed if the company decides to export indirectly, since the intermediary
firm may have advanced research capabilities.

A Step-by-Step Approach to Market Research
Your company may find the following market research method useful.

It basically involves:
O Screening potential markets
O Testing the targeted markets
O Drawing conclusions.

Screening Potenti al Markets
Step 1. Obtain export statistics that indicate your product's exports to various countries.
Step 2. Identify five to ten large and fast-growing markets for your product. Look at them over the past
three to five years. Has market growth and import growth been consistent year to year? Did import
growth occur even during periods of economic recession? If not, did growth resume with economic
recovery?
Step 3. Identify some smaller but fast-emerging markets that may provide good opportunities. If the
market is just beginning to open up, there may be fewer competitors. rowth rates should be
substantially higher in these countries
Step 4. Target three to five of the most statistically promising markets for further assessment.
Testing The Targeted Markets
Step 1. Examine trends for your products as well as related products, that could influence demand of your
products. Calculate overall consumption of the product and the amount accounted for by imports.
Step 2. Find out your sources of competition. These sources could be, the companies in the target country
producing the goods you are trying to export. Other sources of competition are other foreign players like
your self exporting to the target country. Take a look it the "market share" of all your competitors and see
whether it is increasing or decreasing? Increasing market share indicates a strong company and tough
competition.
Step 4. Identify any foreign barriers for the product being imported into the country. Identify if there are
any laws in India preventing you from exporting a certain product.
Step 5. Identify any Indian or foreign government incentives that promote exporting of your particular
product or service
Draw Conclusi ons
After analyzing all the data, it becomes easy to conclude whether a particular market is a good or bad
choice! Once the "target market" is decided upon, the next step is to...



Each target market needs it's own market entry strategy. Foreign markets can differ in many ways -- in
income levels, standards, climates, sizes of people and space, language, religion, cultural preferences and
taboos, business practices, etc. Without a "market-conducive" entry strategy, you will not be able to use
the full market potential; or worse, you could make costly mistakes.

The biggest mistake than many exporters make, is to assume that all markets can be approached in the
same way. DO NOT, make this mistake!
In its simplest form, market entry plan should address 4 key points:
O Distribution
O Promotion
O Pricing
O Localization

Di stri buti on Strategy
The main options you have for product distribution are, are to:
O Sell directly to end users in the market
O Sell through agents or distributors in the market
O Hire overseas sales staff to cover the market
O Establish overseas sales offices in the market
O Establish overseas joint ventures or subsidiaries
The right approach depends on how much control you want over the process, the expected volume of
sales, the openness of the market, and what is customary in each market.

Most exporting is done through "local agents" or "distributors", or "directly".

Overseas sales offices, joint ventures and subsidiaries are last-resort options. When the volume being
exported is high then such methods are used. Only with such high volumes, can the high cost of setting up
the "sales offices" be reasonable.

Joint ventures and subsidiaries may also become necessary if imports are subject to 'prohibitive import
duties' or other restrictions.
Here we have talked about "local agents & distributors", or "direct selling" since this is the method that
will be used to most of our readers.

Sel l i ng through overseas agents and di stri butors
Exporting through local agents or distributors is the norm in most countries and also the most effective.
As market "insiders," they speak the language, understand how business is done, and know who the
customers are and how to reach them. The end-users generally prefer to deal with local agents and
distributors, rather than buy direct from foreign suppliers.
Overseas "agents" act as your representatives in the market. They develop and send sales orders, arrange
payment, prepare all required import documents, and clear the goods through customs. They normally
work on a commission basis and don't take title to the goods.
Overseas "distributors", in addition to representation functions, generally purchase the goods and resell
them at a profit. Many are equipped to stock, install and service the goods. In large, developed markets,
agents and distributors often specialize by industry. In smaller, less developed markets, they're more
likely to carry many different types of products.

Sel l i ng di rect to forei gn end users
Direct selling avoids intermediary costs and offers more control over price, service and level of effort. It is
an option in markets with "only a few buyers", or when you or the end users can "easily find each other".
Direct selling is particularly used for mail order sales and now for Web-based Business-to-Consumer
(B2C) and Business-to-Business (B2B) trade. An intermediary is not needed in these situations.
Promoti on Strategy

You will need some promotion in target markets to make your products known. The options abroad are
generally the same as domestically - a Company Webpage, direct mail (regular or e-mail), telemarketing,
press releases, paid ads, trade shows, and sales trips. Most countries have adequate media and can
support any of these methods. However, some techniques may work better than others in particular
markets. Costs could also affect the approach.

Certain promotions clearly cost more if done from India, such as direct regular mail, telemarketing, and
business travel. If you want to promote using these techniques, let the overseas rep., distributor or
agent.

Pri ci ng Strategy
Ideally, the price at which you sell in the export markets, should cover all costs, be competitive, attract
buyers, and still make a profit! The "optimum" price in one market may not work in other markets.

Whatever the market, price planning must start with the "product's baseline unit costs". Pricing below
cost is economically unwise.
Cal cul ati ng basel ine export costs
Baseline export costs include:
O Fixed costs to produce the product
O 'ariable costs to market and deliver the product abroad.
'ariable export costs might include any or all of the following:
O Market Research
O Postage
O Overseas phone/fax calls
O Promotion
O Travel
O Translations
O Consultant/legal fees
O Export documentation
O Any special packaging, labeling, freight forwarding fees
O Transportation to destination
O Cargo insurance
O Agent/distributor commissions
O Training
O Warehousing
O Product warranties
O Service contracts
O Banking fees
O Credit insurance or credit carrying costs.

Determi ning what the market wi l l bear
Once you determine your baseline costs, your price above that can be whatever the market will accept.
This generally depends upon the market demand, ability to pay, the competition, and your product's
particular attributes (new or unique, superior quality, brand recognition).
Price flexibility is important. You might go for volume discounts or "low introductory pricing" to gain a
foothold in the market. You might also offer delayed payments or credits. These concessions, of course,
will lower your profit margins, at least in the short run.
Local i zati on Strategy
Most countries have different languages, cultural values, tastes, business practices, income levels,
environmental conditions, product standards, legal requirements, etc.

These all have important sales implications. To be successful in different markets you need to "localize"
your approach.

For example, sales won't do well if:
O The product is incompatible with local health, electrical and technical standards.
O The product is unaffordable for buyers.
O The product needs added protections against abnormal climates, pestilence, pollutants, etc.
O The product requires downsizing to fit smaller people, homes, streets, etc.
O The product or packaging uses colors, shapes, words or symbols that offend or appear foolish to
target customers.
O The sales literature and user manuals need translation to be understood.

Increase Market Exposure Abroad
If you're not already known abroad, you'll need to promote your company and products. Overseas
promotion is a must. You won't sell much if the buyers don't know who you are. enerally, the more you
promote, the greater the impact. You can best increase your overseas market exposure through a
combination of "broadcast" and "targeted" techniques.
Here are some broadcast techni ques worth a try:
Company Web site:
Your own company Web site can potentially be "seen" by anyone in the world at any given moment. You
can design it as a company/product catalog, with text, images, price sheets, order forms and anything
else you wish. You can track and collect data on site visitors, and incorporate automatic e-mail responses
to orders and inquires. Web Page set-up costs are fairly low. Be sure to include your Web "URL" address
on your business card and other promotional literature.

Export Directories:
Unlike directories of manufacturers, export directories only list companies actually engaged or interested
in exporting. Since many manufacturers do not export, foreign buyers will more likely look in an export
directory to find potential suppliers. It's to your advantage to be listed in export directories, particularly
those with worldwide Internet outreach.
There are two types of export directories -- company-specific and product-specific.

An export company directory essentially lists the companies by name and industry category.

An export product directory lists the products each company offers for export, often with detailed
descriptions and images.

However, since foreign buyers primarily look for products, not companies, you may get better promotional
results from listings in export product directories.
Export "sel l " offers
You can post your own "offers to sell" in a number of different electronic trade lead websites. It's best to
provide as much information as possible in your offer, to reassure potential respondents that you are a
serious and reliable supplier.
When posting a trade lead, you must specifically in describe:
O Your export product (specifications, uses, benefits),
O "uantity available
O Price and delivery options
O And what you would like to know from respondents

Targeted Promoti on
Here your promotion reaches just the "targeted market or audience". Your message can be more detailed
and personalized. Your objective is high-quality, high-impact exposure. The costs are higher, but so are
the rewards. If you have foreign representatives, they can do some or all of the targeted promotion in
their areas, usually on a cost-sharing basis. Consider these targeted promotion techniques:

Overseas Business Trips:
Face-to-face promotion can be very persuasive. The key is to know whom to see before you get there.
Don't waste precious time looking after you arrive.

Overseas trade shows and Expos:
They're costly, but a trade show puts you face-to-face with many potential customers at once, all able to
see you and your products first hand. You can talk face-to face, book orders, and perhaps even sell off the
floor.
Trade show opportunities exist all over the world. Every country has at least one major annual trade
show. Many countries have shows throughout the year, often on specific industry themes.

Domestic trade shows and Expos:
Some domestic trade shows attract large numbers of foreign buyers. They're serious buyers, because
they've come a long way to see "what's new".
Domestic trade shows are also a good way to meet EMC's and other export intermediate players who you
can get to represent you abroad.


Each target market needs it's own market entry strategy. Foreign markets can differ in many ways -- in
income levels, standards, climates, sizes of people and space, language, religion, cultural preferences and
taboos, business practices, etc. Without a "market-conducive" entry strategy, you will not be able to use
the full market potential; or worse, you could make costly mistakes.

The biggest mistake than many exporters make, is to assume that all markets can be approached in the
same way. DO NOT, make this mistake!
In its simplest form, market entry plan should address 4 key points:
O Distribution
O Promotion
O Pricing
O Localization

Di stri buti on Strategy
The main options you have for product distribution are, are to:
O Sell directly to end users in the market
O Sell through agents or distributors in the market
O Hire overseas sales staff to cover the market
O Establish overseas sales offices in the market
O Establish overseas joint ventures or subsidiaries
The right approach depends on how much control you want over the process, the expected volume of
sales, the openness of the market, and what is customary in each market.

Most exporting is done through "local agents" or "distributors", or "directly".

Overseas sales offices, joint ventures and subsidiaries are last-resort options. When the volume being
exported is high then such methods are used. Only with such high volumes, can the high cost of setting up
the "sales offices" be reasonable.

Joint ventures and subsidiaries may also become necessary if imports are subject to 'prohibitive import
duties' or other restrictions.
Here we have talked about "local agents & distributors", or "direct selling" since this is the method that
will be used to most of our readers.

Sel l i ng through overseas agents and di stri butors
Exporting through local agents or distributors is the norm in most countries and also the most effective.
As market "insiders," they speak the language, understand how business is done, and know who the
customers are and how to reach them. The end-users generally prefer to deal with local agents and
distributors, rather than buy direct from foreign suppliers.
Overseas "agents" act as your representatives in the market. They develop and send sales orders, arrange
payment, prepare all required import documents, and clear the goods through customs. They normally
work on a commission basis and don't take title to the goods.
Overseas "distributors", in addition to representation functions, generally purchase the goods and resell
them at a profit. Many are equipped to stock, install and service the goods. In large, developed markets,
agents and distributors often specialize by industry. In smaller, less developed markets, they're more
likely to carry many different types of products.

Sel l i ng di rect to forei gn end users
Direct selling avoids intermediary costs and offers more control over price, service and level of effort. It is
an option in markets with "only a few buyers", or when you or the end users can "easily find each other".
Direct selling is particularly used for mail order sales and now for Web-based Business-to-Consumer
(B2C) and Business-to-Business (B2B) trade. An intermediary is not needed in these situations.
Promoti on Strategy

You will need some promotion in target markets to make your products known. The options abroad are
generally the same as domestically - a Company Webpage, direct mail (regular or e-mail), telemarketing,
press releases, paid ads, trade shows, and sales trips. Most countries have adequate media and can
support any of these methods. However, some techniques may work better than others in particular
markets. Costs could also affect the approach.

Certain promotions clearly cost more if done from India, such as direct regular mail, telemarketing, and
business travel. If you want to promote using these techniques, let the overseas rep., distributor or
agent.

Pri ci ng Strategy
Ideally, the price at which you sell in the export markets, should cover all costs, be competitive, attract
buyers, and still make a profit! The "optimum" price in one market may not work in other markets.

Whatever the market, price planning must start with the "product's baseline unit costs". Pricing below
cost is economically unwise.
Cal cul ati ng basel ine export costs
Baseline export costs include:
O Fixed costs to produce the product
O 'ariable costs to market and deliver the product abroad.
'ariable export costs might include any or all of the following:
O Market Research
O Postage
O Overseas phone/fax calls
O Promotion
O Travel
O Translations
O Consultant/legal fees
O Export documentation
O Any special packaging, labeling, freight forwarding fees
O Transportation to destination
O Cargo insurance
O Agent/distributor commissions
O Training
O Warehousing
O Product warranties
O Service contracts
O Banking fees
O Credit insurance or credit carrying costs.

Determi ning what the market wi l l bear
Once you determine your baseline costs, your price above that can be whatever the market will accept.
This generally depends upon the market demand, ability to pay, the competition, and your product's
particular attributes (new or unique, superior quality, brand recognition).
Price flexibility is important. You might go for volume discounts or "low introductory pricing" to gain a
foothold in the market. You might also offer delayed payments or credits. These concessions, of course,
will lower your profit margins, at least in the short run.
Local i zati on Strategy
Most countries have different languages, cultural values, tastes, business practices, income levels,
environmental conditions, product standards, legal requirements, etc.

These all have important sales implications. To be successful in different markets you need to "localize"
your approach.

For example, sales won't do well if:
O The product is incompatible with local health, electrical and technical standards.
O The product is unaffordable for buyers.
O The product needs added protections against abnormal climates, pestilence, pollutants, etc.
O The product requires downsizing to fit smaller people, homes, streets, etc.
O The product or packaging uses colors, shapes, words or symbols that offend or appear foolish to
target customers.
O The sales literature and user manuals need translation to be understood.

Increase Market Exposure Abroad
If you're not already known abroad, you'll need to promote your company and products. Overseas
promotion is a must. You won't sell much if the buyers don't know who you are. enerally, the more you
promote, the greater the impact. You can best increase your overseas market exposure through a
combination of "broadcast" and "targeted" techniques.
Here are some broadcast techni ques worth a try:
Company Web site:
Your own company Web site can potentially be "seen" by anyone in the world at any given moment. You
can design it as a company/product catalog, with text, images, price sheets, order forms and anything
else you wish. You can track and collect data on site visitors, and incorporate automatic e-mail responses
to orders and inquires. Web Page set-up costs are fairly low. Be sure to include your Web "URL" address
on your business card and other promotional literature.

Export Directories:
Unlike directories of manufacturers, export directories only list companies actually engaged or interested
in exporting. Since many manufacturers do not export, foreign buyers will more likely look in an export
directory to find potential suppliers. It's to your advantage to be listed in export directories, particularly
those with worldwide Internet outreach.
There are two types of export directories -- company-specific and product-specific.

An export company directory essentially lists the companies by name and industry category.

An export product directory lists the products each company offers for export, often with detailed
descriptions and images.

However, since foreign buyers primarily look for products, not companies, you may get better promotional
results from listings in export product directories.
Export "sel l " offers
You can post your own "offers to sell" in a number of different electronic trade lead websites. It's best to
provide as much information as possible in your offer, to reassure potential respondents that you are a
serious and reliable supplier.
When posting a trade lead, you must specifically in describe:
O Your export product (specifications, uses, benefits),
O "uantity available
O Price and delivery options
O And what you would like to know from respondents

Targeted Promoti on
Here your promotion reaches just the "targeted market or audience". Your message can be more detailed
and personalized. Your objective is high-quality, high-impact exposure. The costs are higher, but so are
the rewards. If you have foreign representatives, they can do some or all of the targeted promotion in
their areas, usually on a cost-sharing basis. Consider these targeted promotion techniques:

Overseas Business Trips:
Face-to-face promotion can be very persuasive. The key is to know whom to see before you get there.
Don't waste precious time looking after you arrive.

Overseas trade shows and Expos:
They're costly, but a trade show puts you face-to-face with many potential customers at once, all able to
see you and your products first hand. You can talk face-to face, book orders, and perhaps even sell off the
floor.
Trade show opportunities exist all over the world. Every country has at least one major annual trade
show. Many countries have shows throughout the year, often on specific industry themes.

Domestic trade shows and Expos:
Some domestic trade shows attract large numbers of foreign buyers. They're serious buyers, because
they've come a long way to see "what's new".
Domestic trade shows are also a good way to meet EMC's and other export intermediate players who you
can get to represent you abroad.




Having decided which country you are going to export to, doing the required market research and finally
developing a "market entry plan" for the country as explained in the previous sections, the next step is to
actually export.
Here we have provided a step-by-step guide to actually exporting the goods. In the next few pages, you
will learn to:
O Find over-seas buyers
O Hire the right distributors and agents
O Prepare goods for delivery
O et paid!



After the goods leave, you want to make certain you'll get paid. You need to be familiar with the payment
methods used for export transactions. They differ from methods used domestically, and some methods are
riskier than others.

Foreign buyers expect to pay only when the goods arrive, or later if possible. Few will be willing to pay in
advance.
Letters of Credit (L/Cs) is the most common export payment method.
Letter of Credi t
With an L/C, a bank pays you. The bank collects independently from the importer. An L/C can be at sight
(immediate payment upon presentation of documents) or a time or date L/C (payment to be made at a
specified future date).
Here's a typical L/C scenario:
1. The exporter and the importer agree on the terms of a sale.
2. The importer applies for the L/C for the amount due from a local commercial bank. The L/C is
normally "irrevocable" to protect both parties (no changes permitted without the consent of both
the buyer and the seller). The bank typically requires the buyer to put up collateral to cover the L/C
amount. At this point, the buyer's bank takes on the obligation to pay you.
3. The importer's bank prepares the irrevocable L/C and all instructions concerning the shipment.
4. The importer's bank sends the irrevocable L/C to a correspondent bank in the exporter's country,
requesting "confirmation". At this point, the confirming bank accepts the obligation to pay the
exporter.
5. The confirming bank sends the exporter a letter of confirmation along with the "confirmed,
irrevocable" L/C.
6. The exporter reviews and accepts all conditions in the L/C.
7. The exporter arranges to deliver the goods to the appropriate exit port or airport.
8. When the goods are loaded, the exporter completes the necessary documents.
9. The confirming bank checks that documents are in order and sends them to the importer's bank for
review.
10. The importer gets the documents from his bank and uses them to claim the goods.
11. The confirming bank pays the exporter by draft at the time specified.
12. Satisfying all the conditions of the L/C terms is crucial. You should carefully review the L/C and
make sure the price and terms are the same agreed to in price quotes and other documents.

If the L/C terms are not precisely met, the bank might not pay. Also, the bank will only pay the amount in
the L/C, even if higher charges for shipping, insurance, or other factors are documented.

If the L/C terms can't be met, or it has errors or even misspellings, you should contact the buyer
immediately and ask for an amendment to the L/C to correct the problem.

To get paid, you must provide documentation showing that the goods were shipped by the date specified.
The freight forwarder can advise about any unusual conditions that might delay shipment. You must also
present the documents by the date specified. The bankers can advise whether there's enough time to
meet a presentation deadline. You should always request that the L/C specify that partial shipments and
transshipment will be allowed. This will avoid unforeseen problems at the last minute.

To move the goods overseas, you'll need to pack, label, document, insure, and ship them.
Some of this preparation is to protect the goods from damage, theft, or delay in transit.
Some actions are legally required, either by the exporting or importing country.

Packi ng for Export
Exported goods face greater physical risks on route than domestic shipments. They're more vulnerable to
breakage, theft, and damage. At some ports, goods may be loaded or unloaded in a net or by a sling,
conveyor, chute, or other method, putting added strain on the package. oods might be stacked on top of
each other or bump against other goods.
Overseas, the cargo might be dragged, pushed, rolled, or dropped. Moisture is also a danger. The cargo
also might be unloaded in the rain. Some foreign ports do not have covered storage facilities. oods can
also be stolen when inadequately protected.
If you're not equipped to pack the goods yourself, use a professional packing firm. This service is usually
provided at a moderate cost.
To avoid problems:
O To deter theft, shrink wrapping where possible and don't list the contents or show brand names on
the outside of the packages.
O For sea shipments, containerize your cargo whenever possible. Containers vary in size, material, and
construction and are best suited for standard package sizes and shapes.
O For air shipments, you can use lighter weight packing, but you must still take precautions. Standard
domestic packing should suffice, especially if the product is durable.

Export Marking and Label ing
Export packages need to be properly marked and labeled to meet shipping regulations, ensure proper
handling, conceal the identity of the contents, and help receivers identify shipments. The buyer usually
specifies export marks that should appear on the cargo, such as:
O Shipper's mark
O Country of origin
O Weight marking (in pounds and in kilograms)
O Number of packages and size of cases (in inches and centimeters)
O Handling marks (international pictorial symbols)
O Cautionary markings, such as "This Side Up."
O Port of entry
O Labels for hazardous materials
Mark containers clearly to prevent misunderstandings and delays in shipping. Letters are generally
stenciled onto packages in waterproof ink. Markings should appear on three faces of the package,
preferably on the top and the other two sides.
Compl y with Trade Requi rements
When exporting from India, there are certain things you must do. Basically, for exporting any goods, you
require to get the goods approved by certain "Customs Authorities".

There are a number of documents required. There are also many incentives that the government gives for
export of certain goods. To completely understand all the requirements, legal formalities and procedures
you must read "Procedures For Exports In India"

Basi c Rul es
Reply quickly or not at all: Delay implies lack of interest to the prospect's needs. Also, MOST
IMPORTANTLY, delays give competitors more time to win the business. Use E-mail, fax, airmail or express
delivery as appropriate.

Answer all questions: The inquirers may ask many questions, but should not have to ask the same
questions twice. If one of your standard letters answers the questions, send the letter. If not, revise the
letter to answer the questions.
Use a business-like tone: Impersonal letters and responses don't make a good impression. Edit your letter
and make it specific to the inquirer. Be friendly and courteous, but avoid slang or informal responses.
Include name, title and contact information in all correspondence (phone, fax, E-mail and Web address).
Print all letters on company letterhead.
Reply in the language specified: Most inquiries are in English. Some are in the author's language but ask
for a reply in English. If the inquiry is not in English, have it translated so it's clear what the prospect
wants. Translate the response if requested. Commercial translators will do this for a fee. Some colleges
and universities also offer translation services.

Enclose product brochures, price lists and other information: Use your materials to answer most
questions, so that the next communication will be a request for quote!
Handl ing Requests for Informati on and Pri ce
"uotes
Handling requests for information and price quotes. As inquiries lead to interest, prospects will send you a
"Request for "uote". Your "Export "uotation" in response should cover all costs to produce and deliver
the goods, plus ancillary fees and markup.

Although formats can vary, "export quotation invoices" or "Performa invoices", cover the following points:
O Date prepared
O Exporter's name, address and telephone/fax/telex numbers
O Buyer's name and address
O Buyer's reference number and date of inquiry
O List and brief description of requested products
O Price of each item
O Trade discount, if applicable
O Country of origin of the goods
O ross and net shipping weight (in metric units where appropriate)
O Total cubic volume and dimensions (in metric units as needed) packed for export
O Delivery point
O Terms of sale
O Payment terms and method, including currency to be used for payment
O Insurance and shipping costs, specifying who will pay
O Total charges to be paid by customer
O Estimated date of shipment arrival
O Any other terms of the proposed sale
O An explicit expiration date for quotation

When you and the buyer have agreed on the final price and terms, a "Commercial Invoice" is used for
billing.

A commercial invoice lists the quantity, weight, unit price, and total price of each item exported, along
with other basic information about the transaction (such as the address of the shipper and seller, and the
delivery and payment terms). The buyer needs the invoice to prove ownership and to arrange payment.
Some governments use the commercial invoice to assess customs duties.

Finding the agents or distributors for each market is crucial. You need good overseas business partners to
generate sales. Agent/distributor selection is especially important. A poor sales rep. could seriously
hamper you in good markets. Therefore, you want to choose carefully.
Here are techniques for finding "interested buyers" and "qualified agents and distributors".
Fi nd Potenti al Buyers
You can't assume that the buyers will find you. You need to search for your own leads.
The best leads are the "first-hand leads" you uncover on foreign business trips or that your overseas reps.
find for you. These leads are also more costly to develop.
If you don't have overseas reps. or can't afford overseas sales trips, give the "second-hand" leads a try.
Second hand leads, are those you find out about by reading on the internet, though magazines etc.
They're often very good leads too. However, since your competitors can learn about them too, you MUST
follow up quickly on these leads.
Some of the best leads are for "development projects" still in the planning stage. These future projects
offer opportunities for equipment, supplies and services of all kinds. They often have government support
and financing.

Fi nd Potenti al Agents/Di stri butors
Finding and keeping good overseas reps. is a four-step process:
1. Identify and contact prospects in each market
2. Screen and select the best prospects
3. Contractually appoint the selected reps
4. Support the reps over time.

Step 1: Contact and Screen Prospecti ve Reps
First impressions count, so what you say first is very important.

The initial message should convey:
O Basic facts about your company and products
O Your market objectives
O The qualifications you seek in a potential rep
O What the rep could expect from you (pricing, payment terms, delivery, promotional support, etc.)
You should respond promptly to all serious responses, try to answer all questions as fully as possible, and
provide product information etc. Do use discretion in sending costly product samples, especially if they
could be easily copied. Product samples should be reserved for the top prospects.

Once you' ve l ocated some prospects, how can you
tel l who' s best?
The key is to know what you want in a rep. You should identify the qualifications needed for effective
representation. The requirements may vary by product, but five basic qualities are fundamental:
Experience: a rep with a solid track record as an agent or distributor; expertise in the product area; and
strong connections in the user community.
Capability: a rep who can market and support the products in the way required (e.g., promote the product,
train users, install and service equipment)
Motivation: a rep who is enthusiastic about the product and able and willing to give it priority
Loyalty: a rep who would not desert you for a competitor or represent a firm with a competing product
Honesty: a rep with a good reputation in the industry and good bank and trade references
When finding your rep. make sure you know the following background information on each prospect:
O Current status and history, including background on principal officers
O Personnel and other resources (sales people, warehouse and service facilities, etc.)
O Sales territory covered
O Current sales volume
O Typical customer profiles
O Names and addresses of foreign firms currently represented
O Trade and bank references
O Capability to meet your special requirements
O Opinion on the market potential for your products
Don't hesitate to ask prospects for this information. They'll respond if they want your business. Of course,
don't go by what they say alone. A face-to-face meeting with top prospects is also wise at some point,
preferably at their premises for a first-hand evaluation.

Sel ect and Appoint the Best Reps
Once you've identified the best prospects, you should formalize the appointment with an
"agent/distributor agreement". These agreements clearly specify the terms of the relationship and the
responsibilities of each party.

The "agent/distributor agreement" should cover the following:
O Products covered
O Territory covered (e.g., country)
O Degree of exclusivity
O Minimum sales/purchase obligations
O Responsibilities for marketing, promotion, shipping
O Responsibilities for technical support, training, after-sales service
O On-hand inventory requirement
O Allocation of expenses
O Terms of commission/payment
O Handling of complaints and disputes (e.g., arbitration)
O Conditions of termination
These points are negotiable. Aim for a mutually beneficial agreement that motivates the rep and protects
your interests.

The rep will also ask you to respond promptly to orders, deliver the product on time, pay the agreed
commission, provide training or other specified support, and pay a fair share of any joint marketing and
promotion expenses.

These are reasonable conditions. In turn, you should seek the following commitments from the rep:
O To apply the utmost skill and ability to the sale of your products
O To effectively perform the marketing, promotion and support tasks you specify
O To meet any performance goals you specify (e.g., sales volume and growth)
O Not to handle competing lines
O Not to disclose confidential information about your company and products
O Not to bind you to agreements without your prior approval

Please Note: It's also very important to have an "escape clause" in the agreement. You need the flexibility
to change your rep. if the rep doesn't perform as agreed.
Most agreements specify a specified duration (usually one year), with automatic annual renewal, unless
either party opts to terminate. Typically, advance notice is required for termination (e.g., 30, 60 or 90
days).

However, some countries limit termination rights in order to protect local businesses. Without an
enforceable termination clause, you might have to retain a poor performer longer than you want, or pay a
high fee to end your relationship with your rep.

You should consult an internationally experienced attorney before signing any agent/distributor
agreement.

Support Your Overseas Reps
ood reps need your co-operation and support as much as you need theirs. Treat them as you would your
domestic sales force. Prices, terms and commissions should be reasonable. At the least, you should:
O Alert your reps to planned changes to the product line, pricing and delivery
O Respond promptly to their calls and correspondence
O Provide product training and customer support as needed
O Consider help with promotions, including cost sharing for trade shows and media ads.
O Deliver the goods when and as promised