How I started my Export back in 1970, and the way it has changed in last 30 years
I am writing this topic with the hope that it may help some organizations or individuals who are interested in export business.
Export is an unknown territory for many domestic businesses, but its potential is enormous.
My first exposure to export was around 1970 and then there were no internet, Skype, smart phones or even fax facilities. Overseas communication channels were limited to, telephone, telegraph or telex and if time permitted postal services.
I was a senior technical executive in a large British multinational corporation and was stationed for some time in India. Our products were consumer electronics and audio vinyl records. We used to manufacture
Western repertoires under license from many large producers but our audio hard wares were designed and manufactured locally. Quality wise our products were in no way near the products produced by USA, Europe and Japan. But we had some big advantage over the competitors, because of the import restrictions that existed in those days in the East European importing countries and their bilateral currency agreement with India.A big factor was also was their demand for Western music.
The First Lesson
My first export trip was a long one. I had to travel to Prague, Buda Pest, Zagreb, Belgrade, Sofia, Tunis, and Casablanca. I bagged some orders and I learned a very important factor that helps export business universally even today, namely face to face meeting with the customers.
Since I moved to USA in 1981, I have been travelling to Japan, China and Singapore on behalf of some well known multinational corporations.
From 2002 I started my own export business from Los Angeles.
My motivation behind export business was my familiarity with many overseas countries, their culture, demography, official norms and social system.
The US Challenge
My initial challenge was to identify an exportable US product on one hand and find an overseas importing customer on the other.
By exportable I mean the cost and specification acceptable to the overseas customer. From US Department of Commerce’s, published data and through personal contacts, I settled on a product and approached a local manufacturer.
Unfortunately, manufacturer’s product specification and that of the customer’s did not match. At this point my engineering background helped and the issue was resolved by arriving at a mutually acceptable product specification.
My next task was to make sure that I can quote a price to the customer which covers all my costs and keeps reasonable margin. The cost components included, product cost, bank charges, freight charge and margins.
Thus we had an exportable US product and an overseas customer lined-up.
My next challenge was to settle a payment method which had to be mutually acceptable to buyer and seller.
and the Payment !
I obviously asked for Irrevocable Letter of Credit or, 100% advance payment through bank, the safest payment method known to me. The importer of course wanted to save bank charges and was cautious to protect their side and proposed CAD (cash against documents). However, they finally agreed to Letter of Credit condition.
Next step in the process was to shop around and locate a reliable logistic company to ship the consignment and prepare the shipping documents like bill of lading, country of origin certificate etc. so that I could submit (negotiate)them with the banks. After this process the invoiced amount was wired to my bank.
Over the last decade while I was able to grow my export business, I also learned many useful rules and strategies to address issues like cost reduction, engaging foreign agents, safeguarding against unscrupulous customers.
Conclusion and continuation …
So far, I have given only a sketch of the process as there are many more details in the process and tasks required to build an export business.
In the future I hope to elaborate on export business and impact of Digital Marketing opportunities for export business.