By Eugene Laney, Head of International Trade Affairs, DHL (USA)
Small and medium sized businesses that are looking to get an edge over the competition should be setting their sights globally. Especially since the U.S. economy appears to be posed for the best performance since the 2008 recession, which is great news for SMEs that want to grow. In fact, a research study by DHL Express found that small and medium-sized businesses selling in international markets are twice as likely to be successful than those solely operating in the US. Additionally, about two-thirds of small businesses would like to sell products overseas, according to the National Small Business Association.
Before we examine some of the specific criteria for global success, it is important to understand the more general arguments in favor of pursuing new international markets. Let’s take a look at the facts: global logistics and broadband communication have forever altered the international trade equation. Once, only the largest corporations could compete on a worldwide scale; today, of the more than 300,000 U.S. companies doing business abroad, 98 percent are SMEs with less than 500 employees. These firms account for more than 30 percent of the goods exported from our shores. Clearly, experience suggests that the international marketplace is open for business for companies of all sizes.
When you consider that 95 percent of the world’s consumers live outside the U.S., and that the International Monetary Fund projects that almost 87 percent of global economic growth will occur beyond our borders, the case for engaging internationally becomes stronger by the moment. The fact is, shipping and communication advances have reconfigured our sense of operational space, and Brazil and Russia are becoming closer by the moment to Boise and Reno. So, what does it take to expand a business to the new frontier?
1. Do your research
Setting your sights globally takes time and research. Companies should determine where they want to do business and how business is done in these countries to avoid mistakes. Familiarize yourself with shipping rules, business practices, culture, currency and product demand.
2. Create a strategy
A key to trade success is developing an effective export/import strategy. Choosing a logistics partner that is experienced in global trade and cross-border transportation can be beneficial, along with making sure your business is equipped to handle the stresses of going global. If shipments are delayed, lost or damaged, goodwill with customers, vendors and suppliers could be jeopardized. Seamless logistics are critical to building good customer relations.
3. One size does not fit all
For instance, Algeria bans the import of used construction equipment and 400+ medicines, Nigeria says ‘no’ to plastic flowers and Argentina won’t allow maps in GPS systems. Customs regulations vary from country to country and it’s the responsibility of each exporter to ensure full compliance with customs requirements and trade regulations around the world. Business association websites as well as U.S. trade departments and chambers of commerce are great resources for customs regulations.
4. Financial Risks
Make sure your business has the capital readily-accessible for all stages of the process. Waiting for payments can take longer when dealing internationally, not to mention currency conversions. The National Export Initiative (NEI), offers a variety of programs that help U.S. companies secure the financing they need.
5. Pay attention to delivery processes
When preparing and sending to their destinations, items may need to be packaged a specific way to meet a certain country’s set of standards. For example, certain countries classify items like food flavoring, perfumes and electric equipment as “Dangerous Good”. Errors in classification or value can also hold up products in customs, which can lead to delivery delays or elevated taxes. The DHL Trade Automation Services, is a tool for businesses to estimate costs such as duties, taxes and other import fees upfront; ensure product compliance; compare costs and compliance for up to five different countries; create trade documents; and search for code classifications.
Many leaders of small and medium-sized businesses here in the U.S. know that going international could be a game changer. They know it based on anecdotal evidence, hard market fact, world demographic trends, and intuition. As a global organization reaching all corners of the world, in 220 countries and territories, we see it every day, and we know they are right. To minimize the risk that comes with such a significant strategic decision and guide your global vision, consider these five tips. And then, after careful planning and research, let the internationalization begin.
Dr. Eugene Laney, Head of International Trade Affairs and resident of Washington, D.C., brings 20 years of experience in public and governmental affairs to DHL U.S. He has worked with the FDA, DOA, the FAA and U.S. State Dept. among others. Laney manages international trade affairs for DHL, including Customs and cargo security issues to help customers meet U.S. regulations, understand the processes and protect their interests. @DHLUS.