International Trade
International trade is one of the profitable industries in the business world it is not new, and has existed for millennia.
International trade is any buying (importing) or selling (exporting) of goods or services in the international market. As the world has become more technologically advanced, international trade has become more rewarding, both in terms of profit and individual satisfaction.
Many starting businesses can improve their chances of success by including International Trade (IT) into their overall business plan. In some cases, a business can be enhanced by incorporating IT marketing to supplement a domestic operation. In other cases, a business can depend only on international trade.
However, entrepreneurs should be warned that international trade involves many complexities above and beyond the basic disciplines necessary for operating a domestic business.
Complexities include issues of documentation, shipping, financial, legal, communications, governmental regulations, and licensing and property rights. Success in international trade will require that the start-up entrepreneur dedicate time, study and investment in order to gain appropriate knowledge and experience on these issues.
Why is international trade so important to starting small businesses?
- In some cases the products or services you may wish to market are not available or made in your home country.
- For many small companies importing and exporting is becoming an essential cornerstone in achieving success, yet it requires knowledge of business disciplines far beyond the basic dos and don'ts of operating a domestic business.
- Some products are cheaper when brought in from out of the country
- A lot of things are more of an "image," if they're imported rather than home-grown. Even when you can make it at home, it all seems classier when it comes from distant shores.
Advantages to consider:
- Enhance your domestic competitiveness
- Increase sales and profits
- Gain your global market share
- Reduce dependence on existing markets
- Exploit international trade technology
- Extend sales potential of existing products
- Stabilize seasonal market fluctuations
- Enhance potential for expansion of your business
- Sell excess production capacity
- Maintain cost competitiveness in your domestic market
Disadvantages to keep in mind:
- You may need to wait for long-term gains
- Hire staff to launch international trading
- Modify your product or packaging
- Develop new promotional material
- Incur added administrative costs
- Dedicate personnel for traveling
- Wait long for payments
- Apply for additional financing
- Deal with special licenses and regulations
Since international trade necessarily requires interaction with governmental agencies, and most all governments wish to expand their country's role in international trade, entrepreneurs can look to governments themselves for a great deal of information.
Valuable local trade resources include:
Top Do's and Don'ts
TOP DO'S
- Take international trade classes at tertiary level.
- Visit trade shows and trade missions. See www.tsnn.com.
- Join an international trade association specializing in your business.
- Personally visit your offshore suppliers (or customers).
- Take advantage of online resources such as www.sba.gov/oit.
- Inspect and approve merchandise before it is shipped.
- Consider hiring an international trade consultant.
- Become personally familiar with all monetary transactions.
- Use a trade lawyer for agent and distributor agreements and licensing requirements.
- To begin, start on a very small scale.
TOP DON'TS
- Rely on a single source of supply (or customer).
- Provide dispute settlement provisions.
- Make assumptions as to vendor's compliance with your specifications.
- Rely on handshake agreements.
- Rely solely on others including employees for importing/exporting expertise.
Sources:
Last Updated: 04 February 2010
