Basics of Exporting
What are exports?
Exports are defined as both the action of sending goods to another country or customs territory, and the goods themselves.
For example, exports are resources, goods or services that traders in one country sell to buyers in another country.
What should I consider before exporting?
Assess whether your business is ready to become globally competitive. At this stage, you should analyse the export potential of your products, the Trade4MSME Guide on Export Potential and the International Trade Centre’s (ITC) Export Potential Map are particularly helpful.
Consider taking an export readiness assessment which can give you more guidance adjusting before entering new, international markets. The Trade4MSME guides on export readiness and assessing e-commerce readiness can provide starting points.
The next step should then be to develop an action plan, to prepare your products for export, and ensuring compliance with domestic and foreign requirements for international shipping and Customs. The Trade4MSME guides on tariffs and taxes at the border and non-tariff measures contain more information.
What other steps can help me prepare for export?
- Identify your product’s Harmonised Commodity Code (HS code): One of the very first steps to take after you have decided to export a product is to identify its HS code (see guide on how do I determine my product’s HS code). Identifying your HS code can help you understand any potential trade measures that might apply as well as to fully use export potential tools.
- Gather key information on your target markets: Business support organizations, government agencies, and online platforms all provide useful guidance that can help you understand your potential markets. You can also access the Global Trade Helpdesk website to map out market demand, trade-related procedures, and possible certifications you will need to export overseas. See the Trade4MSME guide on ‘Where Can I Find Trade Resources and Get Started?’ Additionally, Google provides a free course on Localisation Essentials for users worldwide.
- Determine if your products are subject to trade measures: Certain exports can be subject to trade measures. Understanding your trade requirements can help you to adapt your products to meet certain standards and regulations, such as:
- local environmental sustainability standards,
- packaging and labelling requirements,
- energy efficiency certificates
- Review whether your products are eligible to preferential treatment under free trade agreements: When planning to export, you can check whether there are any trade agreements in place between your domestic and foreign markets. If applicable, your products may benefit from preferential market access and lower trade restrictions in your desired markets. (See Trade4MSME guides on regional and preferential trade arrangements, and rules of origin.)
- Determine whether your products could benefit from certifications such as “Fair Trade” or “Organic.” There are many certifications offered by governments and non-governmental organizations to indicate sustainability, or other consumer preferences that may increase your product’s value and marketability. (See Trade4MSME guide voluntary sustainability standards)
- Choose a route to market. Entry routes will differ depending on the market and your level of exporting experience. For example, initially you may decide to export directly to overseas customers to test the market. If that goes well, the best way to increase sales may be to identify a good agent or distributor who can assist in building customer relationships. You can also consider the following:
- direct sales
- use an agent or distributor
- use licensing or franchising
- create a joint venture agreement
- set up a business abroad
- Arrange the sale – The first step for international trade is to arrange the sale. Contracts need to be drawn up, and should include the chosen Incoterms, if relevant finance needs to be arranged, and organise how the goods are to be shipped or transported. See the Trade4MSME guides on Trade Finance, Incoterms, & Logistics.
- Be mindful about cultural and linguistic challenges in foreign markets: To enter foreign markets successfully you will need to understand different cultural and linguistic requirements for doing business. Business relationships can be categorised as being either ‘relationship’ or ‘transactional’ based. Relationship based prospective clients will want to take time to get to know you and build the relationship. This is likely in Latin America, Middle East, and Asia. Whereas most of Europe, North America, and Australia are considered transactional cultures. In these cultures, clients are more likely to want to get to the point of discussing the deal very quickly. Not being aware of cultural differences and business etiquette could lead to misunderstandings and confusion.
- Manage risks, finances, and payments: Doing business globally can potentially expose your finances to commercial, political, or economic risks, such as high inflation, wars, and contract disputes. Insurance, financial tools, and some new technologies can help mitigate risks see the Trade4MSME guides on Trade Finance, and Trade-Related Insurance.
- Consider protecting your intellectual property (IP): Identifying the various types of IP that apply to your business, and which IP rights you should consider, is an important step when considering selling to foreign markets. You can take an IP diagnostic online, such as the one offered by the World Intellectual Property Organization (WIPO) to understand your IP value and identify your IP protection needs. The Trade4MSME guide on What is Intellectual Property provides more information.
- Select a distribution method: Selling your products abroad requires careful planning to ensure the correct logistics and shipping requirements are followed. To transport your products, you can consider air, sea, and freight options depending on the kind of goods you export and the destination. The Trade4MSME guide on Shipping, will give you more detailed information.
- Prepare your documents to comply with Customs and border procedures: Before reaching their final destination, your products will have to undergo several customs and border procedures in your country. You can check the Global Trade Helpdesk website to see which authorities and procedures you will have to address when your products get to Customs. (See the Trade4MSMEs guides on Customs and Border Procedures and Trade Documents.)
Links to Supporting Information
The International Trade Centre’s (ITC) Export Potential Map Export Potential Map
The United States International Trade Administration’s (U.S. ITA’s) Exporter assessment Exporter Assessments
The Global Trade Helpdesk Global Trade Helpdesk
Google free course on Localisation Essentials Localization Essentials | Udacity Free Courses
UK Government Department for Business and Trade Understand routes to market – great.gov.uk
UK Government Department for Business and Trade Understand the local business culture
The World Intellectual Property Organization (WIPO) Intellectual Property Diagnostic WIPO IP Diagnostics
Trade4MSMEs guide Export Potential Guide
Trade4MSMEs guide Export Readiness
Trade4MSMEs guide Assessing E-Commerce Readiness
Trade4MSMEs guide Tariffs and Taxes at the Border
Trade4MSMEs guide Non-tariff Measures
Trade4MSMEs guide How Do I Determine My Product’s HS Code?
Trade4MSMEs guide Where Can I Find Trade Resources and Get Started?
Trade4MSMEs guide Voluntary Sustainability Standards
Trade4MSMEs guide Regional Trade Agreements and Preferential Trade Agreements
Trade4MSMEs guide Rules of Origin
Trade4MSMEs guide Trade Finance Introduction
Trade4MSMEs guide Incoterms
Trade4MSMEs guide Logistics
Trade4MSMEs guide Shipping
Trade4MSMEs guide Trade Insurance
Trade4MSMEs guide Intellectual Property Considerations
Trade4MSMEs guide Customs and Border Procedures
Trade4MSMEs guide Trade Documents for Exports
Trade4MSMEs guide Enquiry/Contact Points – Trade4MSMES