About Exporting
Frequently Asked Questions |  |
- Why should I export?
- What is involved in a typical export process?
- Who can help export answer questions about foreign markets?
- How can the exporter determine if the chosen product will succeed in the target market?
- How can the exporter determine if the chosen product will succeed in the target market?
- In what foreign markets can products be sold?
- What are the various ways to enter a foreign market?
- What sales and distribution channels can be used in different world markets?
- In what ways can an exporter be represented in a foreign market?
- What do buyers look for when determining the purchase of a product?
- How are financial needs assessed for exports?
- How can costs be reduced?
- What terms of payment are available for exporters from Ireland?
- What is freight forwarder and how should an exporter select one?
- What is the best way to ship products?
- How does the exporter assess if the export documentation is correct?
- What type of packaging does the product require?
- Does the target market influence the packaging of the product?
- What are the distribution chain requirements for the product?
(a) To increase sales and profits
(b) Gain global market share
(c) Reduce dependence on existing domestic Irish markets
(d) Stabilise market fluctuations
(e) Make use of excess production capacity
(f) Enhance competitiveness
(g) Create domestic jobs
2. What is involved in a typical export process?
(a) Feasibility analysis:
- Analyse domestic performance
- Assess the firm's capacities
- Consider the demographics and the social and economic factors of target markets
- Select target markets
(b) Foreign market entry planning:
- Conduct market research into sector
- Evaluate market research
- Plan export market entry strategy
- Comply with target country licensing, standards and certification requirements
- Identify taxes, tariffs, duties, quotas and other non-tariff barriers
(c) Implementation:
- Determine method of distribution
- Establish marketing methods
- Choose sales representatives or sales methods
- Negotiate financial arrangement and currency (GBP or EURO)
- Complete required paper work
- Obtain insurance cover for transit and perhaps credit insurance.
3. Who can help export answer questions about foreign markets?
All technical staff of Irish Exporters Association
4. Who can assist export with research and market planning?
All technical staff at Irish Exporters Association
5. How can the exporter determine if the chosen product will succeed in the target market?
(a) Export/Import trends
(b) Benchmarking product process and quality
(c) Production capacity
(d) Demand in target markets
6. In what foreign markets can products be sold?
The following factors should be taken into account:
- Overall population of country
- Adequate population of target age group
- Climatic and weather variations
- Political stability of target country
- Ratio of import and export of target country
- Openers of market to foreign goods
7. What are the various ways to enter a foreign market?
(a) Direct exporting
(b) Indirect exporting
8. What sales and distribution channels can be used in different world markets?
(a) Agents
(b) Distributors
(c) Established marketing channels
(d) Mail order houses
(e) Wholesalers
(f) Direct sales to end user
9. In what ways can an exporter be represented in a foreign market?
(a) Branch office
(b) Joint venture
(c) Appointing an agent
(d) Appointing a distributor
10. What do buyers look for when determining the purchase of a product?
They look for "Product", "Price" and "Performance",
Product:
- Quality and guarantees
- Technical Specifications
- Design and Drawings
- Patent and Proprietary considerations
- Environmental aspects
- Packaging, labelling and marking
Price:
- Escalation clause, if any
- Terms of payment
Performance:
- Delivery schedules
- Continuity of supplies
- Transportation arrangements
- Spares and after sales service
- Confidentiality
11. How are financial needs assessed for exports?
In order to establish the amount of financing needed for an export transaction, it is important to access financial needs. The exporter can do this by separating financial needs for a specific transaction from those permanent activities required to maintain operations. First, it is necessary to prepare a monthly cash flow statement by listing expected cash flow requirements on a weekly basis and expected weekly cash inflows subsequently, a line should be drawn evidencing the weekly balance. Next, the financial needs should be determined as being of short, or medium or long-term nature.
If exporters have short-term financial needs that do not normally involve large amounts of capital, they can start improving their liquidity by:
- Reducing current assets
- Reducing fixed assets
- Increasing current liabilities
- Optimising equity structure
13. What terms of payment are available for exporters from Ireland?
For the exporter, the greatest fear in international trade is that the buyer will not pay for the goods purchased. The exporter needs therefore to think through the terms of payment to be used in the export contact. A variety of options exist which provides more or less security to the exporter.
- Cash in advance (with order)
- Standby Letter Credit
- Letter of Credit
- Documentary collection
- Open account
14. What is freight forwarder and how should an exporter select one?
Freight forwarders are agents who arrange land, sea and air transportation of goods. They complete all procedural and documentation formalities involved in custom and post clearance on behalf of the shipper and arrange for warehousing of cargo before shipment of export cargo.
Freight forwarders also assist the exporter in selecting economic shipping routes, arranging packaging and marking of shipments, preparing shipping and regulatory documents, delivery goods to carriers, collecting transport documents, arranging insurance and processing claims, booking shipping space and providing advice on the relative costing of sending goods by sea and air.
15. What is the best way to ship products?
All the transportation methods have some advantages and disadvantages. The decision depends on the product, the exporter's needs and preferences. Price, delivery deadlines and special needs of the product are factors to bear in mind. The main transportation methods are:
- Maritime transportation:
It is slow and may not be the most convenient method when transporting perishable goods, goods that have a high value relative to weight and/or volume, or if it is an urgent delivery.
- Air transportation:
A secure and very fast method which usually needs little packaging and has a low cost of capital locked with the goods, yet is usually the most expensive method. This method, often dismissed by SME's in Ireland as being two expensive can be highly cost effective for transporting high value/low volume goods or technology-based products, including software.
- Road transportation:
Allows direct transportation form the supplier's to the buyer's warehouses, heightens security and assures the greatest degree of flexibility. Normally fast and safe. However, transport from Ireland by truck will usually be containerised and grouped and include a ferry crossing.
- Rail transportation:
Slow and flexible, and requires certain number of containers before shipping, but this method is also safe and secure, allowing an exporter to ship large quantities of relatively inexpensive rates. However, rail services for exporting from Ireland are obviously very limited.
16. How does the exporter assess if the export documentation is correct?
The commercial invoice must contain information that is present in the bill of lading and/or other documents. The description of goods should be the same as that in the Letter of Credit, if applicable. To avoid conflict in description, it is good practice to keep the description as short and clear as possible.
In most instances the exporter should ensure that the following documents are available:
- Commercial Invoice
- Customs Invoice
- Bill of Lading
- Air Consignment Notes or Airway Bills
- Insurance Policies or Certificates
17. What type of packaging does the product require?
When products are being packaged their peculiar characteristics must be kept in mind. Different products need different treatment. Product factors to consider when deciding upon the best type of packaging include:
- Fragility
- Durability
- Resistance to abrasion
- Value
- Susceptibility to moisture
- Chemical reactions such as oxidation and corrosion
- Chemical stability
- Deterioration on shelf life.
The mode of shipment will also determine the type of packaging to use. To avoid pilferage in foreign ports it is advisable to use plain packaging devoid of logos and brand names advertising what is inside the package. This will avoid tempering.
18. Does the target market influence the packaging of the product?
Packaging is an important marketing tool, as it remains with the product at point of purchase until the product is used. It also gives the product a good visual image and, through display techniques, distinguishes it from competing products.
A target market can influence packaging in several ways. The following are important factors the exporter should keep in mind when deciding the type of packaging to use for the exported goods:
- Importers' requirements for transportation packaging
- Buying behaviour of customer and
- Packaging of competing product
Packaging requirements are also influenced by international guidelines such as ISO Standards and by national health, safety, environmental and consumer protection measures and regulations affecting the product and packaging concerned.
19. What are the distribution chain requirements for the product?
The type of packaging used plays a crucial role in protecting the product against avoidable loss and damage during transportation. The path the product will follow during transportation, known as the distribution chain, can help the exporter determine the most appropriate form of packaging to employ. In general the longer the distribution chain, the higher the risks for product loss and damage. In order to select the best form of packaging, the exporter should carefully analyse the various elements of the distribution chain. The exporter should be aware of:
- The transportation hazards that may arise long the distribution chain, including breakage, crushing, contamination, climatic hazards (damp, heat, freezing) and theft.
- The quality of chosen shipment methods and their implications for packaging requirements
- Handling and storage facilities available at each storage location in the proposed distribution chain and
- International distribution and coding or marking regulations that would apply for exported products.
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