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Exporting Your Products: Do It Yourself or Hire an Exporting Firm?

Once you have conducted your market research and made the decision to export your products to foreign markets, you must devise an international sales and marketing strategy. Your initial obstacle will be determining which overseas markets have the most potential for selling your products. Second, you will need to decide whether to market them via “direct selling” or “indirect selling.” You may decide to apply a different approach for each market or simply use the same approach throughout.

Direct Selling

“Direct selling” means that you will be responsible for exporting your products to customers in foreign markets. You will be responsible for identifying the best distribution approach, complying with foreign market regulations and requirements, collecting payments, producing export documentation, appropriately labeling your product, shipping logistics, after-sale service and so forth. I recommended that you assign this task to a separate department within your company that is comprised of specialized personnel other than your domestic sales and marketing department. Once this export department is in place, your next step is to determine how to distribute your products.

You can distribute through local distributors, representatives, agents, salaried/commission-based sales personnel, or use local joint ventures. Each approach has its pros and cons financially and legally. Keep in mind also that each country has its own agency and representation laws and you must familiarize yourself with them first. As you travel from one country to another, the distinction between the different forms of representation may be different than in the United States or other developed countries. Ideally, if the local law permits it is always best to work directly with distributors for economic, logistic and legal reasons. You should also familiarize yourself with the U.S. Foreign Corrupt Practices Act, as compliance is critical. Learn also from your competition and study how it has established itself internationally. For example, do your competitors have local presences internationally with their own offices or do they distribute through local distributors? Many U.S. companies set up local offices in key strategic geographic areas of the world to cover and service entire regions. For example, Singapore is considered a gateway to the Far East for U.S. companies, whereas the United Kingdom is considered a gateway to Europe, Africa, and the Middle East. You may also want to familiarize yourself with the major free trade zones (where tariffs and other barriers are usually eliminated) located throughout the world, such as in Hong Kong and Dubai.

Indirect Selling

“Indirect selling” hands over the entire burden of exporting to a specialized domestic company. It will be treated the same way as if you were selling domestically to a customer in the U.S. Such intermediary companies are referred to as export management companies (EMCs), export trading companies (ETCs) or foreign purchasing agents. EMCs typically represent manufacturers internationally with complementary products and offer a wide range of services. An EMC will carry out all aspects of exporting on behalf of the manufacturer. ETCs are very similar to EMCs but mostly function on a product demand-driven case-by-case basis. An ETC may be tasked by a buyer to source for a supplier of a certain product. An ETC does not assume any responsibility to either seller or buyer. Finally, foreign purchasing agents are mostly tasked by foreign governments to source for infrastructure projects.

Trade Shows

Attending trade shows in foreign countries is a great way to learn about the market, your competition and how it markets its products overseas. I recommended that you first attend as a visitor prior to committing as an exhibitor. You can pick up product brochures and talk to representatives about the local market. You may also discover that some of the exhibitors there are potential customers. A great number of them are distributors and importers/exporters and are always searching for new lines to represent. You may want to attend a show once or twice prior to exhibiting there. You need to make sure first that your potential customers will attend in numbers that will make it worthwhile to exhibit. When you are ready to exhibit you should get in contact with the local U.S. Commercial Service office of the U.S. Department of Commerce in the country you plan on exhibiting in to see if there is a U.S. pavilion at the show and how to become part of it.

There are many advantages in being part of a U.S. pavilion at a show. However, if the show is more industry specific (such as health products) it may be more advantageous to exhibit in the hall or area of the show that specializes in your segment of the industry (such as the pharmaceutical section). You may also find that you don’t have to travel too far to exhibit. A great number of trade shows in the U.S. do attract foreign attendees in considerable numbers. It may be more economical to start there first.

Hal Selim

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