If you think exporting is just buying and selling at a global level, you have another think coming. Exporting requires a number of skills beyond domestic business, so you need to prepare your staff accordingly.Download full article here>
Peter Mace, General Manager- Australian Institute of Export
For businesses entering the exciting world of export, there will be some new skill sets required. Those skills range from having the ales, negotiating, and business culture savvy to sign up sales and alliances in a new market, through to understanding the supply chain logistics of safely delivering the product or service to your new customer. Included in the middle are the financing, payment, documentation, insurance and risk mitigation strategies that will all ensure successful exporting.
Being able to obtain, service and grow an overseas client is very different to looking after a domestic buyer. If you make a mistake with an overseas order, the potential ramifications to the business can often be more significant to your business than a comparable mistake at a domestic level. Therefore, it’s best to prepare for your foray overseas by giving your staff the right skills. The skills and know-how for export come from a range of sources, and there are some key ones that exporters need to focus on.
The sales and negotiation process
This involves an understanding of areas like contract law in the buyer’s legal jurisdiction, as well as the expected business and cultural ‘rules’ in the country. It also includes the business negotiation process and the approval process when dealing with government contracts. There is also the concern of protecting your intellectual property in a new market to ensure your original products or services are not stolen or replicated.
To cover off these areas, the tertiary sector, via international business and international marketing courses and MBAs, provides support. On a more practical level, organisations like Austrade, IP Australia plus accounting and legal bodies that understand the requirements of specific markets can provide assistance and guidance.
The supply chain process
This involves moving the product or, if you are a service business, perhaps moving staff offshore. Your staff need to understand the extensive process of booking transport by air or sea, the packaging requirements, deciding which party will organise and pay for tariffs and duties, freight, marine insurance, port charges and so forth. For service businesses that will be stationing staff offshore, ‘supply chain’considerations should include the appropriate visas, acommodation and funding for expenses.
For support, you should work with a credible freight forwarder, which can be an immense help. The Custom Brokers and Forwarders Council of Australia (CBFCA) and the Australian Federation of International Forwarders (AFIF) are two freight forwarder membership groups you should consider for finding contacts. Both associations also run training programs on key logistic requirements such as dangerous goods rules and regulations for shipments. Understanding the process within the business is invaluable, and the Australian Institute of Export (AIEx) also runs regular courses on the end-to-end trade procedures.
For service providers, working with an accounting firm with international offices or global affiliations can provide the necessary detail on staffing issues and managing an overseas point of representation.
The documentation and administration process
The preparation of the documents that must accompany every export is another essential skill to learn. Apart from the transport documents, you are required to deal with commercial invoices, packing lists, certificates of origin, insurance certificates, health, and industry approvals. And if you are using a documentary letter of credit to ensure payment, all these documents need to be accurate and line up to include common information.
There are documentation packages that can supply a lot of this information in a template format, including authorised government forms such as a customs authority number (CAN) to allow export. A listing is available on the Australian Customs website. There are also training sessions provided by many of the banks, and the AIEx, on working through the documentary letter of credit process, and your freight forwarder may be able to supply these documents as part of their service.
Risk protection
This is making sure the product gets to the buyer in good shape, or the service is correctly delivered. It also includes insuring the business for losses, and making sure there are options if your buyer becomes insolvent, an economic crisis occurs, or political risk becomes apparent, for example, if the country is suddenly subject to civil unrest that affects business operations.
Risk management starts with a proper understanding of your sales trade terms, otherwise known as international commercial terms (Incoterms). The Incoterm used indicates where the various responsibilities of buyer and seller start and end.
It is also prudent to talk with your bank or financial institution on safe payment methods, how to manage any foreign exchange exposure, and what financing support it can provide until you are paid. If you need to trade on open account terms, consider talking to a credit insurance company about insuring your receivables.
To help SME exporters work through the variables of payment methods and export finance, the Export Finance and Insurance Corporation (EFIC) and Austrade have jointly developed a new Export Finance Navigator website. The Export Finance Navigator takes users through the export process and highlights the financial risks at each stage, plus provides a list of the organisations that can help accordingly.
Austrade, the Department of Foreign Affairs and Trade (DFAT), and state governments all have offices abroad and can provide good on-the-ground advice on the local situation and potential areas of risk. Being aware of any current sanction regulations is also important; this is both from the perspective of knowing who your counterparty is, as well as correctly dealing with the issue of additional ‘payments’ that might be requested in certain countries.
Export education around the world
Most of our competitor countries have export education,however it does take different forms in different locations. There is a mix of government and private providers as there are in Australia, and the practical forms of education outlined above tend to form the key component. So if your competitors are being schooled in the right procedure, shouldn’t you also keep your skills up to date?
In the UK, the Institute of Export there runs an accreditation program for service providers that advise exporters about their business. Successful participants become a Certified International Trade Advisor. This is one concept that should be adopted in Australia to ensure that those advising businesses have a required level of knowledge; just as those advising businesses on managing their finance risk require accreditation, so should the wider export adviser network.
This summary highlights the various skills required to export successfully. In an industry as complex as exporting, there are a variety of skills necessary for smooth operations, and each person in the business will need the skills related to their export duties, from marketing and sales, to logistics and shipments, and to customer service, administration and payment. By helping your staff acquire those skills, as an exporter you really do give your business the best chance for sustainability and growth.
The Australian Institute of Export is pleased to introduce a new benefit to all our Business Members. The Importers/ Exporters Directory, will list exporting and importing companies from the home page of our website. The listings are only available to AIEx business members. To get your company listed in the directory, you will need to provide the following information:
• Copy of your company synopsis, no longer than 300 words
• Copy of your company logo (jpeg format)
• Contact details: website address and contact telephone number
• Industry sector classification
Users visiting the AIEx website will be able to search for companies by industry and by alphabetical order.
If you are interested in upgrading your membership to Business membership or signing up for membership to take advantage of the listing opportunity than please contact Lisa McAuley on 02 8243 7400 or lisamcauley@aiex.com.au.
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