Export Final 2

8/3/2019 Export Final 2

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SKYLINE BUSINESS

SCHOOL

Economics of International

BusinessSubmitted To

Mr. Sashwat

Presented By:

Sakshi Sondhi

Anul Kapoor

EXPORTMANAUL

September302011


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SKYLINE BUSINESS SCHOOL EXPORT MANUAL

2

CONTENTS

Chapters Topics Page Nos

Chapter 1 Introduction 3

Chapter 2 National Regulations 5

Chapter 3 Barriers in Exports 11

Chapter 4 Basic Planning For Export 13

Chapter 5 Identifying Products For Export 15

Chapter 6 Market selection 27

Chapter 7 Export Strategy 30

Chapter 8 Registration and Export License 33

Chapter 9 Export Procedures 36

Chapter 10 Export Sales Leads 38

Chapter 11 Exporting Product Samples 39

Chapter 12 Export Pricing And Costing 41

Chapter 13 Understanding Foreign Exchange Rates 42Chapter 14 Appointing A Sales Agents 44

Chapter 15 Export Risks Management 46

Chapter 16 Packaging And Labelling Of Goods 49

Chapter 17 Inspection Certificates And Quality Control 51

Chapter 18 Documents Required for Post Parcel Customs Clearance 53

Chapter 19 Custom Procedure For Export 55

Chapter 20 Invisible Export 58

Chapter 21 Export To SAARC 59

Chapter 22 Export To CIS 61

Chapter 23 Support from Banks 63

Chapter 24 Organisations Supporting Exporters 65Chapter 25 Myths About Exporting 69
http://www.eximguru.com/exim/guides/how-to-export/ch_1_starting_export_introduction.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_2_basic_planning_for_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_3_identifying_products_for_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_4_market_selection.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_6_registration_of_exporters.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_7_export_license.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_10_exporting_product_samples.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_11_export_pricing_and_costing.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_12_understanding_foreign_exchange_rates.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_13_appointing_a_sales_agents.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_14_export_risks_management.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_15_packaging_and_labeling_of_goods.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_16_inspection_certificates_and_quality_control.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_18_custom_procedure_for_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_19_invisible_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_20_export_to_saarc.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_21_export_to_cis.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_21_export_to_cis.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_20_export_to_saarc.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_19_invisible_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_18_custom_procedure_for_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_16_inspection_certificates_and_quality_control.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_15_packaging_and_labeling_of_goods.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_14_export_risks_management.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_13_appointing_a_sales_agents.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_12_understanding_foreign_exchange_rates.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_11_export_pricing_and_costing.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_10_exporting_product_samples.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_7_export_license.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_6_registration_of_exporters.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_4_market_selection.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_3_identifying_products_for_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_2_basic_planning_for_export.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_1_starting_export_introduction.aspx


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Chapter 1 Introduction

"Foreign demand for goods produced by home country"

Export in itself is a very wide concept and lot of preparations is required by an exporterbefore starting an export business. As per Section 2 (e) of the India Foreign Trade Act (1992),the term export may be defined as 'an act of taking out of India any goods by land, sea or airand with proper transaction of money

A key success factor in starting any export company is clear understanding and detailknowledge of products to be exported. In order to be a successful in exporting one must fullyresearch its foreign market rather than try to tackle every market at once. The exporter shouldapproach a market on a priority basis. Overseas design and product must be studies properly

and considered carefully. Because there are specific laws dealing with International trade andforeign business, it is imperative that you familiarize yourself with state, federal, andinternational laws before starting your export business.

Price is also an important factor. So, before starting an export business an exporter mustconsidered the price offered to the buyers. As the selling price depends on sourcing price, tryto avoid unnecessary middlemen who only add cost but no value. It helps a lot on cutting thetransaction cost and improving the quality of the final products.

However, before we go deep into "How to export? lets understand first

Why Need to Export?

Exporting a product is a profitable method that helps to expand the business and reduces thedependence in the local market. It also provides new ideas, management practices, marketingtechniques, and ways of competing, which is not possible in the domestic market. Even as anowner of a domestic market, an individual businessman should think about exporting.Research shows that, on average, exporting companies are more profitable than their non-exporting counterparts.

There are many good reasons for exporting:The first and the primary reason for export is to earn foreign exchange. The foreign exchange

not only brings profit for the exporter but also improves the economic condition of thecountry.Secondly, companies that export their goods are believed to be more reliable than theircounterpart domestic companies assuming that exporting company has survive the test inmeeting international standards.Thirdly, free exchange of ideas and cultural knowledge opens up immense business and tradeopportunities for a company.Fourthly, as one starts visiting customers to sell ones goods, he has an opportunity to startexploring for newer customers, state-of-the-art machines and vendors in foreign lands.Fifthly, by exporting goods, an exporter also becomes safe from offset lack of demand forseasonal products.

Lastly, international trade keeps an exporter more competitive and less vulnerable to the


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market as the exporter may have a business boom in one sector while simultaneouslywitnessing a bust in a different sector.

No doubt that in the age of globalization and liberalizations, Export has became of the mostlucrative business in India. Government of India is also supporting exporters through various

incentives and schemes to promote Indian export for meeting the much needed requirementsfor importing modern technology and adopting new technology from MNCs through Jointventures and collaboration.

Trend of Contribution in GDP (20062010)

2006

20%

2007

20%

2008

22%

2009

20%

2010

18%

% GDP


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Chapter 2 National Regulations

Imports and exports are the two important components of a foreign trade. Foreign trade is the

exchange of goods and services between the two countries, across their international borders.

'Imports' imply the physical movement of goods into a country from another country in a

legal manner. It refers to the goods that are produced abroad by foreign producers and are

used in the domestic economy to cater to the needs of the domestic consumers. Similarly,

'exports' imply the physical movement of goods out of a country in a legal manner. It refers to

the goods that are produced domestically in a country and are used to cater to the needs of the

consumers in foreign countries. Thus, the imports and exports have made the world a local

market. The country which is purchasing the goods is known as the importing country and the

country which is selling the goods is known as the exporting country. The traders involved in

such transactions are importers and exporters respectively.

In India, exports and imports are regulated by theForeign Trade (Development and

Regulation) Act, 1992, which replaced the Imports and Exports (Control) Act, 1947, and

gave the Government of India enormous powers to control it. The salient features of the Act

are as follows:-

It has empowered the Central Government to make provisions for development and

regulation of foreign trade by facilitating imports into, and augmenting exports from India

and for all matters connected therewith or incidental thereto.

The Central Government can prohibit, restrict and regulate exports and imports, in all or

specified cases as well as subject them to exemptions.

It authorizes the Central Government to formulate and announce anExport and Import

(EXIM) Policyand also amend the same from time to time, by notification in the Official

Gazette.

It provides for the appointment of a Director General of Foreign Trade by the Central

Government for the purpose of the Act. He shall advise Central Government in formulating

export and import policy and implementing the policy

Under the Act, every importer and exporter must obtain a 'Importer Exporter Code

Number' (IEC)from Director General of Foreign Trade or from the officer so authorised.

The Director General or any other officer so authorised can suspend or cancel a licence

issued for export or import of goods in accordance with the Act. But he does it after giving

the licence holder a reasonable opportunity of being heard.

As per the provisions of the Act , the Government of India formulates and announces an

Export and Import policy (EXIM policy) and amends it from time to time. EXIM policy

refers to the policy measures adopted by a country with reference to its exports and imports.Such a policy become particularly important in a country like India, where the import and
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export of items plays a crucial role not just in balancing budgetary targets, but also in the over

all economic development of the country. The principal objectives of the policy are:-

To facilitate sustained growth in exports of the country so as to achieve larger percentage

share in the global merchandise trade.

To provide domestic consumers with good quality goods and services at internationally

competitive prices as well as creating a level playing field for the domestic producers.

To stimulate sustained economic growth by providing access to essential raw materials,

intermediates, components, consumables and capital goods required for augmenting

production and providing services.

To enhance the technological strength and efficiency of Indian agriculture, industry and

services, thereby improving their competitiveness to meet the requirements of the global

markets.

To generate new employment opportunities and to encourage the attainment of

internationally accepted standards of quality.

Besides this Act, there are some other laws which control the export and import of goods.

These include:-

Tea Act,1953

Coffee Act, 1942

The Rubber Act, 1947

The Marine Products Export Development Authority Act, 1972

The Enemy Property Act, 1968

The Export (Quality Control and Inspection) Act, 1963

The Tobacco Board Act, 1975

At the central level, theMinistry of Commerce and Industryis the most important organ

concerned with the promotion and regulation of the foreign trade in India. The Ministry has

an elaborate organizational set up to look after the various aspects of trade. Within the

Ministry, the Department of Commerce is responsible for formulating and implementing

the foreign trade policy. The Department is also entrusted with responsibilities relating to

multilateral and bilateral commercial relations, state trading, export promotion measures and

development and regulation of certain export oriented industries and commodities. The

matters relating to foreign trade are dealt with by the followingdivisions of the

Department:-

1. Administrative and General Division2. Finance Division
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3. Economic Division

4. Trade Policy Division

5. Foreign Trade Territorial Division

6. Export Products Division

7. Export Industries Division8. Export Services Division

9. Supply Division

The Department's jurisdiction extends over:-

(a) Two Attached Offices:-

Directorate General of Foreign Trade (DGFT):- with its headquarters at New Delhi, is

headed by the Director General of Foreign Trade. It is responsible for implementing

theForeign Trade Policy/Exim Policywith the main objective of promoting Indian exports.

The DGFT also issues licences to exporters and monitors their corresponding obligationsthrough a network of regional offices. The regional offices are located at 33 places.

Directorate General of Supplies and Disposal (DGS&D):- with its headquarters at New

Delhi, is headed by the Director General. It functions as the executive arm of the Supply

Division of the Department of Commerce for conclusion ofRate Contractsfor common user

items, procurement of stores, inspection of stores, shipment and clearance of imported

stores/cargo. It has three Regional Offices located at Chennai, Mumbai and Kolkata.

(b) Five Subordinate Offices:-

Directorate General of Commercial Intelligence and Statistics (DGCI&S):- with its

office located at Kolkata, is headed by the Director General. It is entrusted with the work of

collecting, compiling and publishing/ disseminating trade statistics and various types of

commercial information required by the policy makers, researchers, importers, exporters,

traders as well as overseas buyers.

Office of Development Commissioner of Special Economic Zones:- TheSpecial Economic

Zones (SEZs)are geographically exclusive enclaves separated from domestic tariff areas.

The main objective of SEZs is to provide certain common facilities and a duty free

environment for exporters. Each Zone is headed by a Development Commissioner and isadministered as per the SEZ scheme announced on 31st March, 2000.

Office of the Custodian of Enemy Property (CEP):- is located in Mumbai with a Branch

office at Kolkata. The office is functioning under theEnemy Property Act,1968. All

immovable (like land, buildings, etc.) and movable properties (like securities, shares,

debentures, bank balances, viz. fixed deposits and other amounts lying in the enemy

nationals' bank accounts, Provident fund balances etc.) all over India belonging to or held by

or managed on behalf of Pakistani nationals between the period 10.9.1965 and 26.9.1977 are

vested in the Custodian of Enemy Property for India.
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Pay and Accounts Office (Supply):- The payment and accounting functions of Supply

Division, including those of DGS&D, are performed by theChief Controller of Accounts

(CCA)under the Departmentalized Accounting System. Payment to suppliers across the

country is made through this organisation.

Pay and Accounts Office (Commerce & Textiles):- The Pay and Accounts Office, common

to both the Department of Commerce and the Ministry of Textiles, is responsible for the

payment of claims, accounting of transactions and other related matters through the four

Departmental Pay & Accounts Offices in Delhi, two in Mumbai, two in Kolkata and one in

Chennai.

(c) Ten Autonomous Bodies:-

Coffee Board :- The Coffee Board of India is an autonomous body, functioning under the

Ministry of Commerce and Industry, Government of India. The Board serves as a guide of

the coffee industry in India. The Board focuses on research, development, extension, qualityupgradation, market information, and the domestic and external promotion of Indian coffee.

Rubber Board:- The board is engaged in the development of the rubber industry. This is

done by assisting and encouraging scientific ,technical and economic research; supplying

technical advice to rubber growers; and training growers in improved methods of plantation

and cultivation.

Tea Board :- The primary functions of tea board include rendering financial and technical

assistance for cultivation, manufacture, marketing of tea; promoting tea exports ;aiding

research and developmental activities for augmentation of tea production and improvement oftea quality as well as encouraging and assisting small growers sector financially and

technically.

Tobacco Board:- The Government of India established the Tobacco Board, in place of

Tobacco Export Promotion Council, under theTobacco Board Act of 1975to regulate

production, promotion of overseas marketing and to control recurring instances of imbalances

in supply and demand, which lead to market problems, The Tobacco Board Act aims at the

planned development of Tobacco Industry in the country. The activities of the Board include

the regulation of the production and curing of Virginia Tobacco with regard to the demand in

India and abroad.

Spices Board:- Spices Board was constituted on 26th February 1986 under theSpices

Board Act 1986. It is one of the Commodity Boards functioning under the Ministry of

Commerce & Industry. It is an autonomous body responsible for the export promotion of the

scheduled spices and production or development of some of them such as Cardamom and

Vanilla.

Export Inspection Council (EIC), New Delhi:- The Export Inspection Council is

responsible for the enforcement of quality control and compulsory preshipment inspection of

various commodities meant for export and notified under theExport (Quality Control &

Inspection) Act, 1963.
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Indian Institute of Foreign Trade (IIFT), New Delhi:-

It is engaged in the following activities:-

Training of Personnel in modern techniques of international trade; Organisation of Research in problems of foreign trade; Organisation of marketing research, area surveys, commodity surveys, market

surveys;

Dissemination of information arising from its activities relating to research andmarket studies.

Indian Institute of Packaging (IIP), Mumbai:- is registered under the Societies

Registration Act. the main aim of this Institute is to undertake research of raw materials for

the packaging industry, to organise training programmes on packaging technology and to

stimulate consciousness of the need for good packaging etc.

Marine Products Exports Development Authority (MPEDA), Kochi:- functions under

the Ministry of Commerce, Government of India and acts as a coordinating agency with

different Central and State Government establishments engaged in fishery production and

allied activities. The Authority is responsible for development of the marine products

industry with special focus on marine exports. The role envisaged for the MPEDA is

comprehensive covering fisheries of all kinds, increasing exports, specifying standards,

processing, marketing, extension and training in various aspects of the marine industry.

Agricultural and Processed Food Products Export Development Authority (APEDA),

New Delhi:- came into existence in 1986 to further develop agricultural commodities and

processed foods, and to promote their exports. The aim is to maximize foreign exchange

earnings through increased agro exports, to provide better income to the farmers through

higher unit value realization and to create employment opportunities in rural areas by

encouraging value added exports of farm produce.

(d) Export Promotion Councils (EPCs):-

Presently there are twelve EPCs under the administrative control of the Ministry of

Commerce. These councils are registered as non-profit organisations under the Act. the

Councils perform both the advisory and executive functions. These councils are also the

registering authorities under the Import Policy for Registered Exporters.

(e) Other Organisations:-

Federation of Indian Export Organisations (FIEO):- is an apex body of various export

promotion organizations and institutions with its major regional offices at Delhi, Mumbai,
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Chennai and Kolkata. It provides the content, direction and thrust to India's global export

effort.

Indian Council of Arbitration (ICA), New Delhi:- set up under theSocieties Registration

Actpromotes arbitration as a means of settling commercial disputes and popularises the

concepts of arbitration among the traders, particularly those engaged in international trade.

Indian Diamond Institute (IDI), Surat:- With the objective of enhancing the quality,

design and global competitiveness of the Indian Jewellery, theIndian Diamond Institute

(IDI)was established as a pivotal institute for imparting technical skills to the Gems and

Jewellery industry in the areas of Gemology and Jewellery manufacture.

(f) Advisory Bodies:

Board of Trade (BOT):- was set up on May 5, 1989 with a view to providing an effective

mechanism to maintain continuous dialogue with trade and industry in respect of majordevelopments in the field of International Trade.

Export Promotion Board (EPB):- provide policy and infrastructural support through greater

coordination amongst concerned Ministries for boosting the growth of exports.

Directorate General of Anti-Dumping & Allied Duties (DGAD):- The Directorate is

responsible for carrying out investigations and to recommend, where required, under

Customs Tariff Act, the amount of anti-dumping duty/countervailing duty on the identified

articles which would be adequate to remove injury to the domestic industry.

(g) Public Sector Undertakings:-

The following trading/service corporations are functioning under the administrative control of

the Department of Commerce:-

State Trading Corporation (STC) of India Ltd. MMTC (Minerals and Metals Trading Corporation of India) Limited, PEC Ltd, Export Credit Guarantee Corporation (ECGC) of India Ltd. India Trade Promotion Organisation (ITPO)
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Chapter 3 Barriers in Exports

Trade barriers are generally defined as government laws, regulations, policy, or practices thateither protect domestic products from foreign competition or artificially stimulate exports ofparticular domestic products. While restrictive business practices sometimes have a similareffect, they are not usually regarded as trade barriers. The most common foreign tradebarriers are government-imposed measures and policies that restrict, prevent,or impede the international exchange of goods and services.

Strategic

International agreements limit trade in, and the transfer of, certain types of goods andinformation e.g. goods associated with weapons of mass destruction, advancedtelecommunications, arms and torture, and also some art and archaeological artefacts.Examples include Nuclear Suppliers Group - limiting trade in nuclear weapons andassociated goods (currently only 45 countries participate), The Australia Group - limiting

trade in chemical & biological weapons and associated goods (currently only 39countries), Missile Technology Control Regime - limiting trade in the means of deliveringweapons of mass destruction (currently only 34 countries) and The Wassenaar Arrangement -limiting trade in conventional arms and technological developments (currently only 40countries).

TariffsA tariff is a tax placed on a specific good or set of goods exported from or imported to acountry, creating an economic barrier to trade.Usually the tactic is used when a country's domestic output of the good is falling and importsfrom foreign competitors are rising, particularly if there exist strategic reasons for retaining a

domestic production capability.Some failing industries receive a protection with an effect similar to a subsidy in that byplacing the tariff on the industry, the industry is less enticed to produce goods in a quicker,cheaper, and more productive fashion. The third reason for a tariff involves addressing theissue of dumping. Dumping involves a country producing highly excessive amounts of goodsand dumping the goods on another foreign country, producing the effect of prices that are"too low". Too low can refer to either pricing the good from the foreign market at a pricelower than charged in the domestic market of the country of origin. The other reference todumping relates or refers to the producer selling the product at a price in which there is noprofit or a loss.[8]The purpose (and expected outcome) of the tariff is to encourage spendingon domestic goods and services.

Protective tariffs sometimes protect what are known as infant industries that are in the phaseof expansive growth. A tariff is used temporarily to allow the industry to succeed in spite ofstrong competition. Protective tariffs are considered valid if the resources are moreproductive in their new use than they would be if the industry had not been started. The infantindustry eventually must incorporate itself into a market without the protection ofgovernment subsidies.[9]

Tariffs can create tension between countries. Examples include the United States steel tariffof 2002 and when China placed a 14% tariff on imported auto parts. Such tariffs usually leadto filing a complaint with the World Trade Organization (WTO) and, if that fails, couldeventually head toward the country placing a tariff against the other nation in spite, toimpress pressure to remove the tariff.
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Subsidies

To subsidize an industry or company refers to, in this instance, a governmental providingsupplemental financial support to manipulate the price below market value. Subsidies aregenerally used for failing industries that need a boost in domestic spending. Subsidizing

encourages greater demand for a good or service because of the slashed price.

The effect of subsidies deters other countries that are able to produce a specific product orservice at a faster, cheaper, and more productive rate. With the lowered price, these efficientproducers cannot compete. The life of a subsidy is generally short-lived, but sometimes canbe implemented on a more permanent basis.

The agricultural industry is commonly subsidized, both in the United States, and in othercountries including Japan and nations located in the European (EU).

Critics argue such subsidies cost developing nations $24 billion annually in lost income

according to a study by the International Food Policy Research Institute, a D.C. group fundedpartly by the World Bank.[11]However, other nations are not the only economic 'losers'.Subsidies in the U.S. heavily depend upon taxpayer dollars. In 2000, the U.S. spent an all-time record $32.3 billion for the agricultural industry. The EU spends about $50 billionannually, nearly half its annual budget on its common agricultural policy and ruraldevelopment.
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Chapter 4 Basic Planning For Export Introduction

Before starting an export, an individual should evaluate his companys export readiness.

Further planning for export should be done only, if the companys assets are good enough for

export.

There are several methods to evaluate the export potential of a company. The most commonmethod is to examine the success of a product in domestic market. It is believed that if theproducts has survived in the domestic market, there is a good chance that it will also besuccessful in international market, at least those where similar needs and conditions exist.

One should also evaluate the unique features of a product. If those features are hard toduplicate abroad, then it is likely that you will be successful overseas. A unique product mayhave little competition and demand for it might be quite high.

Once a businessman decides to sell his products, the next step is to developing a properexport plan. While planning an export strategy, it is always better to develop a simple,practical and flexible export plan for profitable and sustainable export business. As theplanners learn more about exporting and your company's competitive position, the exportplan will become more detailed and complete.

Objective of doing Export

Identifies what you want to achieve from exporting. Lists what activities you need to undertake to achieve those objectives. Includes mechanisms for reviewing and measuring progress. Helps you remain focused on your goals.For a proper export planning following questions need to answered:

1. Which products are selected for export development?2. What modifications, if any, must be made to adapt them for overseas markets?3. Which countries are targeted for sales development?4. In each country, what is the basic customer profile?5. What marketing and distribution channels should be used to reach customers?6. What special challenges pertain to each market (competition, cultural differences, import

controls, etc.), and what strategy will be used to address them?7. How will the product's export sale price be determined?8. What specific operational steps must be taken and when?9. What will be the time frame for implementing each element of the plan?10. What personnel and company resources will be dedicated to exporting?11. What will be the cost in time and money for each element?12. How will results be evaluated and used to modify the plan?From the start, the plan should be viewed and written as a management tool, not as a staticdocument. Objectives in the plan should be compared with actual results to measure thesuccess of different strategies. The company should not hesitate to modify the plan and make

it more specific as new information and experience are gained.
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Some "Do's and Don'ts of Export Planning

DOS DONTS

Seek good adviceand test your ExportPlan with advisers

Create a bulky document that remainsstatic.

Review the Export Plan regularly withyour staff and advisers

Assign responsibility to staff forindividual tasks and ensure your key staffmembers are signed on to the Plan

Create scenarios for changedcircumstanceslook at the what ifs for

changes in the market environment fromminor to major shifts in settings. e.g.changes of government, new import taxes

Use unrealistic timelines. Review themregularlythey often slip

Develop an integrated timeline that drawstogether the activities that make up theExport Plan

Make sure that you have the human andfinancial resources necessary to executethe Export Plan. Ensure existing

customers are not neglected


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Chapter 5 Identifying Products For Export

A key factor in any export business is clear understanding and detail knowledge of productsto be exported. The selected product must be in demand in the countries where it is to beexported. Before making any selection, one should also consider the various governmentpolicies associated with the export of a particular product.

Key Factors in Product Selection

The product should be manufactured or sourced with consistent standard quality,

comparable to your competitors. ISO or equivalent certification helps in selling the product inthe international market.

If possible, avoid products which are monopoly of one orfew suppliers. If you are themanufacturer - make sure sufficient capacity is available in-house or you have the

wherewithal to outsource it at short notice. Timely supply is a key success factor in export

business

The price of the exported product should not fluctuate very often - threatening profitability

to the export business.

Strictly check the government policies related to the export of a particular product. Thoughthere are very few restrictions in export - it is better to check regulatory status of yourselected product.

Carefully study the various government incentive schemes and tax exemption like duty

drawback and DEPB.

Import regulation in overseas markets, specially tariff and non-tariff barriers. Though amajor non-tariff barrier (textile quota) has been abolished - there are still other tariff and non-tariff barriers. If your product attracts higher duty in target country - demand obviously falls.

Registration/Special provision for your products in importing country. This is speciallyapplicable for processed food and beverages, drugs and chemicals.

Seasonal vagaries of selected products as some products sell in summer, while others inwinter. Festive season is also important factor, for example certain products are more sellableonly during Christmas.

Keep in mind special packaging and labelling requirements of perishable products likeprocessed food and dairy products.

Special measures are required for transportation of certain products, which may be bulky orfragile or hazardous or perishable.
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Indian Agro Products

Agricultural sector is the mainstay of the rural Indian economy around, which the socio-economic privileges and deprivations revolve, and any change in its structure is expected tohave a corresponding impact on the existing pattern of social equality. The growth of Indias

agriculture sector during the 50 years of independence remains impressive at 2.7 % perannum. About two-third of this production growth is aided by gains in crop productivity. Theneed based strategies adopted since independence and intensified after midsixties primarilyfocused on feeding the growing population and making the country self reliant in foodproduction.

Indian agriculture has attained an impressive growth in the production of food grains that hasincreased around four times during the planned area of development from 51 million tons in1950-51 to 199.1 million tonnes in 1997-98. The growth has been really striking since sixtiesafter the production and wide spread usage of high yielding varieties of seed, fertilization,pesticides, especially in assured irrigated areas.

Exports of Agricultural products


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Major Export MarketsMajor destinations for export of Indian agricultural products, include

Product Major Markets

Floriculture USA, Japan, UK, Netherlands & Germany

Fruits & Vegetable Seeds Pakistan, Bangladesh, USA, Japan & Netherlands

Fresh Onions Bangladesh, Malaysia, Sri Lanka, UAE, Pakistan & Nepal

Other Fresh Vegetables UAE, Bangladesh, Pakistan, Nepal & Sri Lanka

Walnuts Spain, Egypt, Germany, UK & Netherlands

Fresh Mangoes UAE, Bangladesh, UK, Saudi Arabia & Nepal

Fresh Grapes Netherlands, UK, UAE, Bangladesh, Belgium

Other Fresh Fruits Bangladesh, UAE, Netherlands, Nepal, Saudi Arabia

Dried & PreservedVegetables Russia, France, USA, Germany & Spain

Mango Pulp Saudi Arabia, Netherlands, UAE, Yamen, Arab Republic & Kuwait

Pickles & Chutneys Russia, USA, Belgium, Netherlands & France

Other Processed Fruits USA, Netherlands, UK, UAE & Saudi Arabia

Buffalo Meat Malaysia, Philippines, Saudi Arabia, Jordan & Angola

Sheep / Goat Meat Saudi Arabia, UAE, Qatar, Oman & Kuwait

Poultry Products UAE, Kuwait, Oman, Germany & Japan

Dairy Products Bangladesh, Algeria, UAE, Yamen, Arab Republic & Egypt

Animal Casings Germany, Portugal, France, Spain & Italy

Processed Meat Seychelles, UAE, Hong Kong, Germany & USA

Groundnuts Indonesia, Malaysia, Philippines, UK & Singapore

Guar Gum USA, China, Germany, Italy & Netherlands

Jaggery & Confectionery Portugal, USA, Bangladesh, Pakistan & Nepal

Cocoa Products Nepal, Netherlands, Malaysia, Yamen Arab Republic & UAE

Cereal Preparations USA, UK, Nepal, Sri Lanka & UAE

Alcoholic Beverages Jamaica, Thailand, UAE, Angola & BhutanMiscellaneous Preparations UAE, Iran, USA, UK & Indonesia

Milled Products USA, UK, Indonesia, Maldives & UAE

Basmati Rice Saudi Arabia, Kuwait, UK, UAE & Yamen Arab Rep.

Non Basmati Rice Nigeria, Bangladesh, South Africa, UAE & Ivory Coast

Wheat Bangladesh, Philippines, UAE, Sudan & Myanmar

Other Cereals Bangladesh, Sri Lanka, Sudan, Benin, Thailand

Natural Honey USA, Germany, Saudi Arabia, UK & UAE

Pulses Bangladesh, Sri Lanka, Pakistan, UAE & Nepal


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Future ForecastsAccording to experts, India has to play a bigger role in the global markets in agricultureproducts in the future. The country is expected to strengthen its position among the worldsleading exporters of rice. Presently it is the 2nd largest rice producer after China and the 3rdlargest net-exporter after Thailand and Vietnam.

However, recent reports states that agriculture plays an important, though declining role inIndian economy. Its contribution in overall GDP fell from 30 % in the early nineties, to below17.5 % in 2006. The country is a world leader in specialist products, such as buffalo milk,spices and bananas, mangoes, chickpeas etc., which are considered as important in the Indiandiet and are also exported. India is the 5th largest cultivator of biotech crops across the world,ahead of China. In the year 2006, around 3.8 million hectares of land were cultivated withgenetically modified crops, by about 2.3 million farmers. The primary GM crop is Bt Cottonthat was introduced in 2002. The future growth in agriculture sector must come from -

Advanced technologies that are not only "cost effective" but also "in conformity" withnatural climatic regime of the country

Technologies applicable to rain-fed areas particularly Continued genetic improvements for improved seeds and yields Improvements in data for superior research, results, and sustainable planning Bridging the gap between knowledge and practice; and

Judicious land use resource surveys, effective management practices and sustainable use ofnatural resources.

Indian Chemical Industry

Chemical industry is an integral component of the Indian economy, which contributes around7 % of the Indian GDP. It touches our lives in several different different ways. Whether it isthermoplastic furniture we use, or a synthetic garment we wear, or a drug we takewe areinextricably associated to it. The industry is integral to the development of agricultural andindustrial development in India and has key linkages with various other downstream, such asautomotive, consumer durables, engineering, food processing and more.

Globalization posses many challenges to the industry, which has predominantly developed ina protected environment. With World Trade Organization assuming an increasing role inglobal economics, there is an inevitable move towards an inter-linked international economy.

However, there have been cases where particular segments of the industry, such aspharmaceuticals and biotechnology have performed exceedingly well even at the worldlevel.

During 2005-06, the industry contributed 17.6% of the manufacturing sector. However thecountry continues to be a net importer in 2005-06, with exports of US$ 5.95 billion andimports of US$7.92 billion. The worth of Indian chemicals industry during 2005-06 wasUS$30.59 billion, which reflected a growth of 10.23% over the previous year and a CAGR of8.68% during the last 3 years.


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Future Forecasts

A decade of economic reforms has resulted in major changes in the way the Indian chemicalmanufacturers work and operate. Individual enterprises have realized their strengths andweaknesses and are gearing up to face the new challenges. Success stories in dyes andagrochemicals have boosted the confidence of Indian manufacturers to take on globalcompetition squarely. Some of the advantages of Indian chemical industry include -

Due to its low cost infrastructure, the country has huge export potential. According to arecent report, India's chemical exports have the potential to rise US$ 300 billion by 2015.This defines an investment of US$ 50 billion in chemical industry alone.

The country has the capacity for high value addition being close to Middle East. This is acheap and ample source for petrochemical feedstock.

In some categories of chemicals, India does have the advantage for exports (dyes,pharmaceuticals and agrochemicals) by establishing strategic alliances with countries likeRussia. With the expertise and know-how available in the country, there is a tremendousexport potential in dyestuff and agrochemical market.

Availability and abundance of raw materials for titanium dioxide and agro-basedproducts, such as castor oil provide an opportunity to yield significant value addition.This, however, would require substituting their exports in raw form by producing highvalue derivatives.

The major challenges are pursuit for feedstock and knowledge management. The naphtha-based crackers that have been providing feedstock to the industry traditionally, have nowbeen replaced by new gas-based crackers. Along with China, India pose a stiffcompetition to the Middle East due to the vibrant exports and huge unexplored reserves ofoil and gas. The Govt. of India is acting as a facilitator by establishing LNG terminals andacquiring equity interests in overseas proven oil reserves. This will fuel the fast growth inchemical industry. The govt. is also engaged in the development and formulation of aNational Policy on Pharmaceuticals and mega-industrial chemical estates.


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Home Furnishings

A fast emerging economy in the world of home textiles, India produces a wide range ofproducts, including home furnishings, household linen, curtain tapestry and yardage madewith several textures and varying thickness. The home furnishing industry mainly exports

fabrics, bed linen, table linen, toilet and kitchen linen, towels, cushions, curtains, pads,tapestries and upholstery's, carpets and floor coverings, etc. The industry has adopted severalmeasures and techniques to offer premium quality and eco-friendly products to the globalindustry.

The home furnishing products can be broadly categorized into five categories, which include- bedding, window dressings, bathroom textiles, cushions and covers, and table linen.Household penetration levels are high, especially in the largest sectorsbedding andwindow dressings. While replacement due to wear and tear is not inevitably frequent, anincreased consumer interest in home interior products has stimulated buying in what is nowvery much a fashion-led industry. The industry also benefits from the growing number of

households, a trend, which is expected to continue at an even faster rate.

Future Forecast

The future prospects for the Indian home furnishing industry are bright, especially in thepost-quota regime. The industry is in an expansion mode and is expected to benefit fromgrowing demand both in the domestic and global markets.

While exports of Indian home furnishing products have increased, profits are sliding as priceshave dropped 8-20 % and the industry is on the verge of a shakeout. With importersfavouring suppliers with vertical production systems rather than dispersed manufacturing

facilities, Indian exporters need to shore up their mass manufacturing techniques. The majorrequirement is the development of infrastructure.

Labour laws also constitute a stumbling block in the growth of Indian home furnishingcompanies. Political conditions have prevented successive governments from instituting anexit policy. Because of this, manufacturers cannot employ short duration labour as theycannot lay them off when the world trade cycle turns. Low labour productivity is anothermajor constraint.

On the technology front, government has initiated efforts to encourage manufacturers to go infor advanced technology. The grant has been increased for helping manufacturers in the up-gradation of technology.

While China is clearly the leading exporter in the world of home furnishings, it is not a directcompetitor of India. While China mainly uses man-made fibers and caters mass markets,India produces natural fiber and serves niche markets. At present, India is leading producer ofman-made fiber and raked 3 in cotton. A garment-driven and export-led strategy is expectedto help the Indian market to grow to at $85 billion by 2010, according to a CRISIL report.The strategy should be focus on moving up the value chain instead of exporting intermediatestage products, say industry experts.


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Indian Apparel and Textile Industry

The apparel and textile industry occupies a unique and important place in India. One of theearliest industries to come into existence in the country, the sector accounts for 14% of thetotal Industrial production, conduces to about 30% of the total exports and is the second

largest employment creator after agriculture.

The apparel and textile industry caters to one of the most basic requirements of people andholds importance; maintaining the prolonged growth for improved quality of life. The sectorhas a unique position as a self-reliant industry, from the production of raw materials to thedelivery of end products, with considerable value-addition at every stage of processing. Overthe years, the sector has proved to be a major contributor to the nations' economy.

Its immense potential for generation of employment opportunities in the industrial,agricultural, organized and decentralized sectors & rural and urban areas, especially forwomen and the disadvantaged is noteworthy.

Future OutlookAt present, the Indian apparel and textile sector is struggling to survive because of increasingcosts of raw material, poor off take of yarns coupled with the poor realization from yarndealers and a sharp rise in interest rate and, the worse, the rising value of the Indian rupee. Asthe industry is aiming an export turnover of $50 billion by 2012, amounting to more thanUS$ 100 billion including that for domestic consumption, it is imperative that the countryleverages its underlying advantages and builds capabilities to place itself as a completesolution provider rather than only a manufacturer.

Indian Jewellery

An important emerging sector of Indian economy, gem and jewellery is a leading foreignexchange earner for the country. The country consumes around 800 tonnes of gold thataccount for 20 % of global gold consumption and nearly 600 tonnes of this goes into

jewellery making. The Indian jewellery market, which is estimated to be US$ 13.5 billion infiscal 2006-07, accounts for 8.3 % of the global jewellery sales, according to a study byKPMG.

The increase in purchasing parity of the middle class and surging income levels have resultedin consumption growth of gems and jewelery by about 11 % in the 5 year period preceding2006-07. It also contributes over 15 % of the total exports of country and providesemployment to 1.3 million people directly and indirectly. The two major segments of the gemand jewelry industry in India are gold jewelery and diamonds. The contribution of gold

jewelry is about 80 % of the total jewelry market, with the balance comprising fabricatedstudded jewelry, which includes diamonds as well as gemstone studded jewelry.

Indian jewelry sector is well supported by Government policies and the banking sector, witharound 50 banks providing about US$ 3 billion credit to the Indian diamond industry. Inaddition, the country is expected to have a diamond bourse soon.


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Future Forecast

The future growth of Indian jewellery industry lies in finding new markets and in adding

value. Worldwide, jewellery is a big business, which is extremely lucrative as margins arehigh compared to diamonds, as branding can demand high premiums.

India was a late entrant to the global jewellery market and its industry took off after

establishment of the export processing zones in 1990, especially the special economic zone in

Mumbai that accounts for 40 % of India's exports. It has taken the country a few years to

incorporate international designs, styles and finishes.

The outlook for the industry is bright, but how much of this amazing performance will

actually translate into improved bottom lines will lie in the capability of individual businesses

to harness the potential of new markets and products. With intense competition in market, the

stock performance will depend on how efficiently, in terms of both cost and marketing,

companies can cut and polish diamonds and also venture into the lucrative but difficult

jewellery industry.

Indian Leather

In view of its immense potential for employment, growth and exports, leather industryoccupies an important place in Indian economy. The sector is spread across the formal as wellas informal sectors and produces a comprehensive range of products from raw hides to

fashionable shoes. The industry consists of firms in all capacities, including small artisans tomajor global players. Specialized institutions have been setup to promote the overall growthand performance of the industry. There has been an increasing emphasis on the planneddevelopment of industry, which is aimed at optimum utilization of available raw materials formaximizing the returns, especially from exports.

The country ranked first among major livestock holding nations in the world and thus has arich endowment of raw materials in terms of the cattle population. It has the capacity to cater10% of the global leather requirement. Export of leather and leather products during 2004-05recorded an impressive growth at US$2,380 million, exceeding the target of US$2,284million set by the Commerce Ministry.

Today, the sector is amongst top 8 export earners for the country and employs around 2.5million people. A major part (about 60-65%) of the production is in the small / cottage sector.Endowed with 10% of the world raw material, the export of country constitutes about 2% ofworld trade.

Indian Leather ExportsSome important Facts & Figures

India is the largest livestock holding country - 21% large animals and 11% smallanimals

A source for 10% world leather requirement About 2.50 million workforce (30% women)


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Annual production value is over U$ 4 billion Annual export value is over U$ 2 billion Export growth CAGR 8.20% (2000-04) Promising technology inflow and FDI High priority to occupational safety and work environment Compliance to environmental standards Immense potential for future growth (domestic as well as export)

Some of the important leather products exported by India include -

Leather Footwear Footwear Components (Shoe Uppers, Soles etc.) Leather Garments Leather Goods (Including Harness & Saddlery, Leather Gloves etc.) Finished Leather

Future ForecastsWith its rich resource base of raw hides, skins and human capital, Indian leather industry hasthe capability to increase its share in global leather trade. At present, Indian leather exportsaccount for 3% of the global trade with USA, Germany, UK and Spain as major markets. Thecountry has a lot of potential to increase its share in these markets by utilizing its uniqueadvantage of economies of scale and the capability to produce niche products.

Several challenges, which hinder the export growth of the Indian leather industry, include -effluent management, non-tariff barriers, quality specifications and cost of compliance tovarious standards. However, there are ample opportunities to realize the export potential ofthis sector, with the adoption of suitable strategies.

The global leather industry is in the process of shifting its manufacturing base fromdeveloped to developing nations. This provides an opportunity for increased flow of foreigndirect investment into India. In such a scenario, factors like abundance of leather, increasingawareness for quality, manufacturing know-how and designing capabilities, work in favour ofIndia. Increasing presence of big corporate houses in this industry would help improve theinvestments required, and thereby the competitiveness in the international markets.

Indian Handicrafts and Gifts

India is one of the major exporter and supplier of handicrafts and gift products to the worldmarket. The Indian handicrafts industry is highly labour intensive and decentralized, beingspread all across the country in rural and urban areas. The sector is considered as the secondlargest employment-generating sector after agriculture with numerous artisans engaged incraft work on a part-time basis. The industry offers employment to over 6 million artisans,including a large number of women and people from the weaker sections of society.

The present day handicraft tradition of India is a perfect example of assimilation between thetraditional designs and modern techniques. The fast growing demand for Indian handicraftand gifts products have made this sector a full-fledged large scale organized industry that isgrowing day by day.


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Future Prospects

The dynamism of handicrafts industry in India is unparalleled - be it the traditional Indianarts and crafts or a customized version of an overseas art form. Unlike in the past when theindustry was battling to carve a niche in the market, there is a great demand for Indianhandicrafts today that is being nurtured by different government and non-governmentalorganizations.

The sector is economically important from the point of view of low capital investment, highratio of value addition, and high potential for export and foreign exchange earnings for thecountry. The export earnings from Indian handicrafts industry for the period 1998-99amounted to US$ 1.2 billion.

The market is developing due to the huge demand of its products in terms of utility, cost and

aesthetics. To centralize and better organize the sector, the government has also initiated theconcept of 'Towns of Excellence' that are providing recognition to production areas where thehandicrafts have been traditionally developed. Today, there are 35 urban 'Hats' all across thecountry, that allow for the allotment of built-up stalls to artisans on a fortnightly rotationbasis at nominal costs.

The industrial revolution and the increasing productivity had slowed down the growth and thequality of arts and crafts, but for some decades now, the scenario has changed and machine-made products no longer attract the people. Presently handicrafts are being considered asvocational media and it is also opted for style statement and the leisure pursuit. Today, thecrafts and craftspeople have a vital role to play in modern Indianot just as part of its

cultural and tradition, but as part of its economic future.

Indian Plastic Industry

The Indian plastic industry has taken great strides. In the last few decades, the industry hasgrown to the status of a leading sector in the country with a sizable base. The material isgaining notable importance in different spheres of activity and the per capita consumption isincreasing at a fast pace. Continuous advancements and developments in polymertechnology, processing machineries, expertise, and cost effective manufacturing is fastreplacing the typical materials in different segments with plastics.

On the basis of value added, share of India's plastic products industry is about 0.5% of India'sGDP. The export of plastic products also yield about 1% of the country's exports. The sectorhas a large presence of small scale companies in the industry, which account for more than50% turnover of the industry and provides employment to an estimate of about 0.4 millionpeople in the country. Approximately Rs 100 billion are invested in the form of fixed assetsin the plastic processing industry.


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The top 10 trading partners for Indian plastic industry are

USA UAE Italy UK Belgium Germany Singapore Saudi Arabia China Hong Kong

ProductsThe major plastic products that India export are -

Raw Materials - PVC, polypropylene, polyethylene, polystyrene, ABS, polyester chips, urea /phenol formaldehyde, master batches, additives, etc

Packaging - PP / HDPE woven sacks / bags / fabrics, poly-lined jute goods, box strapping,BOPP tapes, a range of plastic sheeting / films (of PVC, PP, HDPE, nylon, FRP, PTFE,acrylic, etc.), pouches, crates, bottles, containers, barrels, cans, carboys, shopping / carrier /garbage bags.

Films - Polyester film, BOPP film, mesh, metallised / multilayer films and photo films

Consumer Goods - Toothbrushes, cleaning brushes, hair brushes, nail / cosmetic brushes,combs, moulded furniture (chairs, tables, etc.) house ware, kitchenware, insulated mouldedhouse ware, microwave re-heatable containers, mats and mattresses, water bottles, gifts andnovelties, a range of stationery items like files, folders, mathematical instruments, etc.

Writing Instruments - Pens, ball pens, markers, sign pens, refills, etc.

Travel ware - Moulded luggage, soft luggage, a range of bags like school bags / ladieshandbags, wallets, etc.

Leather Cloth / Artificial Leather Floor Coverings - Vinyl floor coverings and linoleums

Foam Boards Drip Irrigation Systems / Components Pipes & Pipe Fittings - Made of PVC,HDPE, PP, FRP, nylon

Water Storage Tanks Toys and Games Engineering Plastics - Auto components, parts forvarious machinery / equipment in telecommunications, railways, electronics, etc.

Electrical Accessories FRP / GRP Products - Safety helmets / equipment, pipes, storagetanks, etc.

Sanitary Fittings - Cisterns, toilet seats, bathroom fittings, etc.

Construction - PVC profiles, doors, windows, etc.


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Tarpaulins Laminates Fishnets / Fuhsing Lines Cordage / Ropes / Twins Eyewear - Lenses,spectacle frames, goggles, etc.

Laboratory Ware Surgical / Medical - Disposable syringes, blood / urine bags, I.V. sets, etc.

Future Forecast

The Indian plastic industry clearly has the potential to continue its fast growth. However,over the next few years, competition in the industry is expected to increase considerably, as aresult of global trends, which will become applicable to the liberalizing economy of country.To survive the competition, both polymer manufacturers and processors will need to adoptradically new methods and approaches to reduce costs, improve market and customer serviceand management of performance.

The per capita consumption of plastics in India is well below the world average. However italso reflects the many years of growth ahead, as the country's economy continues to grow andupgrade the usage of products. Translating the expected growth rate into incremental demand,it is obvious that the country will remain one of the largest sources of additional demand foralmost all kinds of plastics.

Hence, it is clear that plastics will continue to be a growth industry, with boosting prospectsfor fresh investments in polymerization and downstream processing capacity. This is incontrast to the situation in various other countries, where growth prospects are limited, eitherbecause of stagnant demand or due to the historical over building. In such countries, the

overall outlook would be far less promising, with the key imperatives being cost cutting andcapacity rationalization


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Chapter 6 Market Selection

After evaluation of companys key capabilities, strengths and weaknesses, the next step is to

start evaluating opportunities in promising export markets. It involves the screening of largelists of countries in order to arrive at a short list of four to five. The shorting method shouldbe done on the basis of various political, economic and cultural factors that will potentiallyaffect export operations in chosen market.

Some factors to consider include:

1. Geographical Factorso Country, state, region,o Time zones,o Urban/rural location logistical considerations e.g. freight and distribution

channels

2. Economic, Political, and Legal Environmental Factors Regulations including quarantine, Labelling standards, Standards and consumer protection rules, Duties and taxes

3. Demographic Factors Age and gender, Income and family structure, Occupation, Cultural beliefs, Major competitors, Similar products, Key brands.

4. Market Characteristics Market size, Availability of domestic manufacturers, Agents, distributors and suppliers.

Foreign Market Research

Understanding a markets key characteristics requires gathering a broad range of primary andsecondary research, much of which you can source without cost from the internet.

Primary research, such as population figures, product compliance standards, statistics andother facts can be obtained without any cost from international organizations like UnitedNations (UN) and World Trade Organizations (WTO). Analysis of export statistics over a

period of several years helps an individual to determine whether the market for a particularproduct is growing or shrinking.
http://www.eximguru.com/exim/guides/how-to-export/ch_4_market_selection.aspxhttp://www.eximguru.com/exim/guides/how-to-export/ch_4_market_selection.aspx


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Secondary research, such as periodicals, studies, market reports and surveys, can be foundthrough government websites, international organisations, and commercial marketintelligence firms.

Foreign Market Selection Process

Step 1: Gather Information on a Broad Range of Markets

Market selection process requires a broad range of information depending upon the productsor services to be exported, which includes:

The demand for product/service. The size of the potential audience. Whether the target audience can affords product. What the regulatory issues are that impact on exports of product. Ease of access to this marketproximity/freight. Are there appropriate distribution channels for product/service. The environment for doing businesslanguage, culture, politics etc. Is it financially viable to export to selected market.

You can gather much of the first step information yourself from a variety of sources at littleor no cost. Sources of information include:

Talking to colleagues and other exporters. Trade and Enterpriseweb site, publications, call centre. The library. The Internet.

Step 2: Research a Selection of Markets In-Depth

From the results of the first stage, narrow your selection down to three to five markets andundertake some in-depth research relating specifically to your product. While doing so, someof the questions that may arise at this stage are:

What similar products are in the marketplace (including products that may not be similar but are used to achieve the same goal, e.g. the product in our sample

matrix at the end of this document is a hair removal cream. As well as undertakingcompetitor research on other hair removal creams, we would also need to consider

other products that are used for hair removal, i.e. razors, electrolysis, wax). What is your point of difference? What makes your product unique? What are the key

selling points for your product? How do people obtain/use these products? Who provides them? Are they imported? If so from which countries? Is there a local manufacturer or provider? Who would your major competitors be? What are the key brands or trade names? What is the markets structure and shape? What is the markets size? Are there any niche markets, and if so how big are they? Who are the major importers/ stockists / distributors / agencies or suppliers? What are the other ways to obtain sales/representation?


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What are the prices or fees in different parts of the market? What are the mark-ups at different distribution levels? What are the import regulations, duties or taxes, including compliance and

professional registrations if these apply? How will you promote your product or service if there is a lot of competition? Are there any significant trade fairs, professional gathers or other events where you

can promote your product or service? Packagingdo you need to change metric measures to imperial, do you need to list

ingredients? Will you need to translate promotional material and packaging? Is your brandingcolours, imagery etc., culturally acceptable?

Foreign Market Selection Entry

Having completed the market selection process and chosen your target market, the next stepis to plan your entry strategy.There are a number of options for entering your chosen market. Most exporters initially

choose to work through agents or distributors. In the longer term, however, you may considerother options, such as taking more direct control of your market, more direct selling orpromotion, or seeking alliances or agreements

1. LicensingAnother less risky market entry method is licensing. Here the Licensor will grant anorganisation in the foreign market a license to produce the product, use the brand name etc inreturn that they will receive a royalty payment.

2. FranchisingFranchising is another form of licensing. Here the organisation puts together a package of thesuccessful ingredients that made them a success in their home market and then franchise

this package to overseas investors. The Franchise holder may help out by providing trainingand marketing the services or product. McDonalds is a popular example of a Franchisingoption for expanding in international markets.

3. ContractingAnother of form on market entry in an overseas market which involves the exchange of ideasis contracting. The manufacturer of the product will contract out the production of theproduct to another organisation to produce the product on their behalf. Clearly contracting outsaves the organisation exporting to the foreign market.

4. Manufacturing abroadThe ultimate decision to sell abroad is the decision to establish a manufacturing plant in thehost country. The government of the host country may give the organisation some form of taxadvantage because they wish to attract inward investment to help create employment for theireconomy.

5. Joint VentureTo share the risk of market entry into a foreign market, two organisations may come togetherto form a company to operate in the host country. The two companies may share knowledgeand expertise to assist them in the development of company, of course profits will have to be

shared out also.


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Chapter 7 EXPORT STRATEGY

Export strategy is to ship commodities to other places or countries for sale or exchange tomake profits out of the transaction.

Thus it requires a 360 degree analysis of internal and external factors. The analysis shouldhelp develop short and long term business goals and action plans, and help guide your marketselection process.

Environmental factors internal to the company can be classified as strengths or weaknesses,and those external to the company can be classified as opportunities or threats.

StrengthsBusiness strengths are its resources and capabilities that can be used as a basis for developinga competitive-advantage. Examples of such strengths include:

Patents Strong brand names. Good reputation among customers. Cost advantages from proprietary know-how. Exclusive access to high grade natural resources. Favourable access to distribution networks.

WeaknessesThe absence of certain strengths may be viewed as a weakness. For example, each of thefollowing may be considered weaknesses:

Lack of patent protection. A weak brand name. Poor reputation among customers. High cost structure. Lack of access to the best natural resources. Lack of access to key distribution channels.

OpportunitiesThe external environmental analysis may reveal certain new opportunities for profit andgrowth. Some examples of such opportunities include:

An unfulfilled customer need. Arrival of new technologies. Loosening of regulations. Removal of international trade barriers.

Threats

Changes in the external environmental also may present threats to the firm. Some examplesof such threats include:

Shifts in consumer tastes away from the firm's products Emergence of substitute products. New regulations. Increased trade barriers


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Management mistakes: The management might tap in some of the organizational pitfalls, like

poor selection of overseas agents or distributors or chaotic global organization.

Ways of exporting

The company can decide to export directly or indirectly to a foreign country.

Direct selling in export strategy

Direct selling involves sales representatives, distributors, or retailers who arelocated outside the exporter's home country. Direct exports are goods and services that aresold to an independent party outside of the exporters home country. Mainly the companies

are pushed by core competencies and improving their performance of value chain.

Direct selling through distributorsIt is considered to be the most popular option to companies, to develop theirown international marketing capability. This is achieved by charging personnel from the

company to give them greater control over their operations. Direct selling also gives thecompany greater control over the marketing function and the opportunity to earn moreprofits.

In other cases where network of sales representative, the company can transfer themexclusive rights to sell in a particular geographic region.A distributor in a foreign country is a merchant who purchases the product from themanufacturer and sells them at profit. Distributors usually carry stock inventory and servicethe product, and in most cases distributes deals with retailers rather than end users.

Evaluating Distributors The size and capabilities of its sales force. Its sales record. An analysis of its territory. Its current product mix. Its facilities and equipment. Its marketing polices. Its customer profit. Its promotional strategy.

Direct selling through foreign retailers and end usersExporters can also sell directly to foreign retailers. Usually, products are limited to consumerlines; it can also sell to direct end users. A good way to generate such sales is by printingcatalogues or attending trade shows.

Direct selling over the InternetElectronic commerce is an important mean to small and big companies all over the world, totrade internationally. We already can see how important E-commerce is for marketing growthamong exporters companie

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