Small to medium-sized enterprises and making import-export decisions

By Tekle Sebhatu

There is no question that internationalization of markets is becoming increasingly important to the growth of small to medium-sized enterprises (SME) and their countries as these enterprises globalize their businesses and become the main engine of economic growth in their countries. Globalization has a direct impact on SMEs. The success of SMEs is directly related to jobs that helps stimulate the economic growth of a country.

As part of the globalization phenomenon, some SMEs may only market their product/service globally and others may have production facilities in one place and market their product/services in others. Most often SMEs use exporting as a primary mode of entry into a new market only because their risk is limited to the product sold.

While some SMEs realize the benefits of exporting/importing and are attempting to comprehend the world marketplace in which they must operate, many companies, have not looked to exporting/importing as a growth area. This is changing, however, as most SMEs are slowly realizing that success in the marketplace requires looking beyond national borders. The move to become a global player, whether it is a proactive decision or one imposed by competitive dynamics, has extensive implications for an SME’s growth. If a company is to export/import it has to evaluate available human and capital resources, commitment by top management, market strength, product strength and establishing good relationships with suppliers or buyers.

SMEs are no longer confined to their national boundaries as they have been for decades. In many countries supported by their governments, business-friendly incentive programs are looking for opportunities to capitalize on the removal of barriers due to regional economic integration or agreement by member countries of the World Trade Organization (WTO). Global economics is all but breaking down international barriers and encouraging the free flow of goods, services, capital and people. Good examples of this are the European Union (EU), the North America Free Trade Agreement (NAFTA), the Associations of South East Asia Nations (ASEAN), MERCOSUR in South America and ECOWA in West Africa. These are all regional agreements with objectives to remove trade and non-trade barriers among the member countries, thus providing opportunities for SME’s to gain market share.

Many SMEs recognize, now more than ever, the need to be competitive in the marketplace; they have to look to other countries for markets, raw materials, components and final products. Additionally, many SME’s have made dramatic changes in their organizational, quality and price structures for their products. These changes are helping them compete more effectively in the global marketplace. SMEs need to pursue aggressive business strategies for selling or purchasing goods and services if they are to remain competitive globally.

Making Export Decisions

Small and medium enterprises’ attitudes toward going global are slowly changing. Many are finding that their product is competitive in price and quality, and, as a result, are seeing an overall increase in demand for their product or service. This increase in demand could be for current proven products that they have in the existing market, or for products that are facing obsolescence. Generally, SMEs have always felt that exporting was only for large companies; this, however, is changing and is driven by advancement in telecommunication, the Internet and transportation technologies. Even the smallest companies with limited resources are participating and are gaining market share from outside their boarders.

There are several ways that SMEs can measure their products’ potential and to help them decide whether to export/import or not. One of the most popular indicators of a product’s potential is the company’s success in the domestic markets. If a company is selling successfully in the domestic market, there is a good chance that the company will be successful in selling its products or services in the international marketplace. For some SMEs, exporting/importing may not be all that different from domestic selling. A company may choose to sell its products or services to another domestic company, which then sells the product or service in the overseas market or purchase good for resale from an importer that purchased goods from foreign markets. The seller or buyer will probably notice little difference between that sale and other domestic sales.

The second indicator is the introduction of new products into both the domestic and international marketplace. This could also include a product that has reached its maturity stage in the product life cycle; when its sales starts to decline, the same product could be introduced in other markets in which the product was not previously sold, allowing SMEs entry into newer markets.

Finally, in concept, most experts agree that any decision to export/import requires the same ingredients as decisions in domestic business. That is, the firm’s commitment, knowledge of the market, a realistic budget, time and patience. Still, going global can be a challenging experience for SMEs, but the rewards can be substantial. To remain competitive, profitable and to be part of the main engine of economic growth in their country, SMEs must look beyond their borders and seek and capitalize on new opportunities in the global arena.

Free Webinar – Export Documents and Shipping

Are you familiar with: the major export documents that can help you complete a successful transaction? Differences between Incoterms 2000 and Incoterms 2010? Differences between “Schedule B” and “Harmonized Tariff System (HTS)”? Join me in a presentation discussing export documents and shipping.

At the end of this webinar you should be able to:

• Identify the common documents used in an export transaction.
• Learn the differences between Schedule “B” and Harmonized Tariff System (HTS).
• Identify key export shipping costs.
• Understand the basics of Incoterms-2010.

This webinar will benefit:

• Those with a product suitable for exporting, but no previous exporting experience.
• Those with some export experiences, but are seeking to expand their exporting knowledge.
• Export Managers, and Supervisors (good refresher!)
• Private organizations with export related activities banks, insurance and shipping companies.
• Entrepreneurs and trade consultants.
• Professional organizations – trade and industry associations, Chamber of Commerce’s.
• Government agencies – foreign trade agencies, business development centers

No password, use of web browser only! No dial in required you will use your computer speakers. You may e-mail your questions in advance to stcintL@stcinternational.us

Event Date: Friday, December 23, 2011

Event Link: http://www.gvolive.com/conference,78353144

Time: 11:00 AM PST – 12:00 AM MST – 1:00 PM CST – 2:00 PM EST

For further information please visit our website:  http://www.stcinternational.us

What is C-TPAT?

Customs- Trade Partnership against Terrorism (C-TPAT) is a joint government-business initiative to build cooperative relationship that strengthens overall supply chain and border security. C-TPAT Benefits:

Reduced number of inspections for reduced border time.
Personal Customs advice from an assigned account manager.
An emphasis on self-policing, no Customs verification
Eligibility for account based processes
Access to C-TPAT member list

For additional Information please visit: http://www.cbp.gov/xp/cgov/trade/cargo_security/ctpat/

Free Webinar – Global Market Entry Strategies

Entering global markets requires thorough research, assessing risk, devoting resources and strong commitment to challenges. Join me for about one hour educational webinar to discussion strategies that companies use when entering new markets.

At the end of this webinar you should be able to:

• Understand the different modes of entering new markets and risks associated with them
• Learn on the most popular mode of entry used by the majority of small and medium size companies
• Explore the different exporting approaches that your company can use
• Identify the role of Export Management Companies (EMC) and Export Trading Companies (ETC)
• Understand criteria’s to consider when choosing distributor or Agent

This webinar will benefit:

• Firms that have plan to enter new markets (new and existing firms)
• Those with a product suitable for export, but no previous exporting experience.
• Export Managers, and Supervisors (good refresher!)
• Entrepreneurs and trade consultants.
• Professional organizations – trade and industry associations, Chamber of Commerce’s.
• Government agencies – foreign trade agencies, business development centers.

No password, no dial in required use of web browser only. You may e-mail your questions in advance to stcintL@stcinternational.us

Event Date: Friday, December 9, 2011

Time: 11:00 AM PST – 12:00 AM MST – 1:00 PM CST – 2:00 PM EST

Event Link:  http://www.gvolive.com/conference,78353144

For further information please go to:  http://www.stcinternational.us