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EXPORT WASHINGTON ASSSISTANCE

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1 EXPORT WASHINGTON ASSSISTANCE
Helping Small to Medium Sized Companies Achieve Global Export Success in Washington State

2 Have you considered exporting your Goods and or Services into Foreign Markets?
Washington State SBDC has Certified Global Business Professionals and Certified Business Advisors that will assist you in export business planning, market research, market entry and financing initiatives.

3 Today’s Topics Why Export? Export Assistance
Exporting Road Map & Export Readiness Export Plan Basics Market Research & Market Selection Common Market Entry Methods Export Financing & Logistics

4 1. Why Export?

5 Benefits of Exporting Increase Sales in Foreign Markets
Find sales growth opportunities in foreign markets with more customers than U.S. Markets Capture better profit margins when higher price points are available in foreign markets Higher sales volumes can provide improved economies of scale leading to improved profits Decrease Impact from Domestic Conditions Avoid dependence on a limited domestic customer base Foreign markets may provide outlet for unsold, excess or outdated inventory in slow or depressed domestic markets

6 Lots of customers out there
96% of the world’s consumers live outside the US 66% of the world’s purchasing power is outside the US 91% of Washington small businesses do not export Population Purchasing Power Washington

7 Washington’s Major Export Markets
Foreign Markets 2013 EXPORT REVENUE TOTALS China 16.7 Billion Canada 8.9 Billion Japan 7.0 Billion United Arab Emirates 4.0 Billion Mexico 3.2 Billion Data Source: U. S. Census

8 Washington Key Industry Sectors with Export Opportunities
Manufacturing Technology Aerospace Value-Added Agriculture Health Sciences Industrial Controls Bio-Medical Green Technologies Professional Services

9 National Export Initiative
Federal program created to increase amount of American products and services sold outside the U. S. This Program Seeks To: Improve advocacy for U.S. exporters Remove trade barriers  Enforce trade rules Promote sound economic policies Increase access to trade financing

10 Washington State Exporting
In 2010, 9% of WA State Businesses Exported (The National Average is 4 %) 5 Year Goal is to GROW EXPORTING TO 18% 9% 18% WA STATE WA STATE 9% 18%

11 Common Fears About Exporting
It’s too Risky I’m too small I can’t afford it Export Myths It’s too complicated I can’t compete

12 2. Export Assistance

13 Export Readiness Center
Created in 2011 as result of the National Export Initiative Part of the Washington SBDC The SBDC provides services designed to help companies grow their business, achieve higher profits and improve operations. Cooperative effort of Washington State University, other educational institutions, economic development organizations and the U.S. Small Business Administration.

14 Our Goal: Help clients conduct successful business in foreign markets
Domestic Markets Foreign Markets

15 How We Do It Export Advising Foreign Market Research
Export Readiness Center assists Washington based small and mid-sized businesses that are new to exporting or looking to expand into new markets. Export Advising Foreign Market Research Export Readiness Training Service Provider Referrals

16 International Trade Specialist provide In-Depth, Confidential, No-Cost
Export Advising International Trade Specialist provide In-Depth, Confidential, No-Cost Export Readiness Assessment Foreign Market Research Market Selection Export Plan Development Market Entry Strategies Trade Finance Export Compliance Professional Resource Referrals

17 Our Research and Training Foreign Market Research:
Performed by staff of university interns Custom and targeted to client’s needs No-cost Training: Export workshops – Ready, Set, Export! Low-cost Includes Expert Advise from: Trade Specialists, Attorneys, Shippers, EXIM Bank, and Export Finance Assistance Center of Washington

18 Professional Service Provider Referrals

19

20 Collaborative Advising Approach to Exporting
International Trade Specialist Certified Business Advisor State & Federal Export Resources Research Interns Professional Service Providers EXPORT CLIENT

21 Network Collaboration
Two Export Readiness Centers - Seattle and in Spokane. International Trade Specialists collaborate and co-advise with SBDC Certified Business Advisors across the state.

22 Export Readiness Center Locations
Washington SBDC and Export Readiness Center Locations WSBDC Export Center WSBDC Export Center

23 Export Assistance Organizations
US Dept. of Commerce USEAC Bureau of Industry and Security EXIM BANK Federal Export Assistance State Export Assistance WA State Dept. of Commerce WA State Export Finance Assistance Center Local Export Assistance WSBDC Export Readiness Center Int’l Trade Specialist – Spokane/Seattle export.wsbdc.org World Trade Center Tacoma General Business Assistance WSBDC Certified Business Advisors INNOVATE WASHINGTON innovatewashington.org SBA

24 3. Exporting Road Map & Export Readiness

25 The Path to Export Success
Grow Exports Enter Export Markets Manage Export Compliance Develop an Export Plan Evaluate Export Markets Achieve Export Readiness

26 “Must Have” to Export Upper management commitment and buy-in to exporting In-depth experience with the product or service Adequate cash flow or financing capability Production capacity and supply-chain capability to provide targeted export products or services

27 “Nice-to-Have” Exporting or international expertise
Foreign language ability Cultural awareness and sensitivity Travel to foreign markets

28 Road Map to Successful Exporting
Our Road Map approach is designed to help clients become successful and sustainable exporters EVALUATE EXPORT READINESS PRODUCT KNOWLEDGE MARKET OPPORTUNITY OPERATIONS COMMITMENT FINANCE CAPABILITY DEVELOP EXPORT PLAN CUSTOMIZED EXPORT PLAN MARKET FIT ANALYSIS MARKET ENTRY STRATEGY EXPORT PERFORMANCE METRICS EXPORT COMPLIANCE IMPLEMENT EXPORT PLAN EXECUTE EXPORT PLAN & Review Performance IDENTIFY Under-Performing Export Processes ESTABLISH CLEAR Performance Metrics IMPLEMENT Best Practices For Exporting STRENGTHEN MARKET POSITION BUILD Stronger Links with End Users INCREASE Channel Loyalty & Distribution Enhance Terms of Payment Expand Market Enter New Markets NEW TO EXPORT MARKET EXPORT READY

29 Are You Export Ready? How do you know if your business is ready to handle the Costs, Risks and Effort required to successfully export into Foreign Markets?

30 Export Readiness Starts Here
Clients need to become Export Ready in all FOUR critical Business Areas EVALUATE EXPORT READINESS PRODUCT Knowledge MARKET Opportunity OPERATIONS Commitment FINANCE Capability Have you successfully produced, marketed and sold products and/or services in the U.S.? Are you aware of demand in foreign markets? Have you received purchase inquiries from foreign buyers or identified international demand for your products and/or services? Do you have top management’s commitment to provide direction, financial support and critical resources to enter foreign markets? Do you have an Export Business Plan with secured financial resources that will fund your market entry and export activities?

31 Evaluating Export Readiness
Go to our website and do the online Export Readiness Assessment: https://export.wsbdc.org/survey R The Export Readiness Assessment is a tool designed to help you better understand your ability to begin or expand your exporting activities. The assessment covers the FOUR most critical areas of: Market, Product, Operations and Finance.  Trade Specialists may request that you take the Assessment prior to scheduling an initial advising session with them. This assessment is designed to give you and the Trade Specialist helpful information at the beginning of your advising relationship which can make a substantial difference in jump-starting the advisor's ability to add value from the first visit and moving forward.

32 4. Your Export Plan

33 Next Step to Export Readiness
DEVELOP YOUR EXPORT PLAN CUSTOMIZED EXPORT PLAN MARKET FIT ANALYSIS MARKET ENTRY STRATEGY EXPORT PERFORMANCE METRICS EXPORT COMPLIANCE Do you have an Export Business Plan that defines your market opportunity, return on investment and your capacity to deliver? Do you have research or data that confirms real foreign market demand with end-user pricing that will return acceptable profits? Have you selected reliable market entry methods that will minimize risks and support distribution and market growth opportunities? Have you established realistic and relevant performance metrics that helps evaluate your export business initiatives? Are you aware of current U.S. export requirements and do you have resources to establish a compliance program and procedures?

34 Your Export Plan is Critical
An Export Plan is not merely a document. It’s a TOOL to properly evaluate all the factors that would affect your company's ability to go international. It should define: Your Company’s commitment to international trade Reason for exporting Potential export markets and customers Methods of foreign market entry Export pricing strategy Exporting costs and projected revenues Export financing alternatives Legal requirements Transportation methods Overseas partnership or foreign investment capabilities

35 Example Export Plan Outline
Company Profile II. Current Export Status III. Product Focus for Export Opportunity IV. Current Export Resources, Functions & Requirements V Target Market Research & Country Profile VI. Market Entry Strategy VII. Market Development Action Plan (milestones/dates) VIII. First Year Export Budget and Financing Sources

36 5. Market Research and Market Selection

37 Market Selection Involves Research
Even if your business has international inquiries or has made recent sales of its product or services into foreign markets… Avoid “Reactive Market Selection” and Do Market Research to Analyze Market Fit and Minimize Risks

38 Reactive Market Selection Mistakes
Making sales based on unsolicited foreign purchase inquiries Following a competitor by making “copy-cat” sales to compete in new foreign market Unwittingly agreeing to a sale through middleman when your company can sale directly into a foreign market Committing money and resources to unqualified foreign distributors or agents Committing money and resources to poorly aligned foreign Partnerships

39 The Benefits of Market Research
Good market research improves your market entry by assisting you to: Develop target list of foreign markets to be screened Rank target market opportunities by multiple variables Select & prioritize markets by screened rankings Estimate market entry resources & associated costs Select viable market entry methods Estimate realistic timelines for ROI

40 Available Research Sources
In addition to U.S. Government data bases and internet research sources, the WSBDC Export Readiness Center is provided access to private international data bases through the SBDC and their Universities to seek out the information on behalf of the company.

41 6. Common Market Entry Methods

42 Which Market Entry Method?
Indirect Exporting > Export Management Companies (EMC) > Trading Companies 2. Direct Exporting > Direct Sales in Country Through Representatives or Distributors 3. Contractual Market Agreements > Licensing > Franchising 4. Foreign Production (Equity Strategy) > Strategic Alliance > Joint Ventures (JV) > Wholly Owned Foreign Entity (WOFE)

43 Risk versus Reward Market Entry Modes
INDIRECT Exporting DIRECT LICENSING INVESTMENT JOINT VENTURE FRANCHISE High Investment Higher Risk Higher Control Low Investment Lower Risk Lower Control Amount of Investment, Risk, Control & Profit Potential

44 Foreign Market Entry Resources
To improve Market Entry strategy: Download and read export.gov Country Commercial Guides for your target market. Attend product relevant trade shows in U.S. or abroad. Involve an experienced bank with international services that meet your needs. Use Int’l Attorneys or Accountants - finalize distributor or licensing agreements. Establish reliable and agreed upon payment terms with foreign buyers. Attend export business and export compliance training programs (BIS).

45 Foreign Market Entry Resources
Use resources to find and qualify potential buyers, distributors and/or partners: KOMPASS Database - search for existing Representatives or Distributors Foreign Commercial Services - find & screen potential players Vendor Questionnaire & Profile Assessment tools - evaluate players

46 7. Export Financing and Logistics

47 Resources for Small Business Exporters
Export-Finance Counseling Export Finance Assistance Center of Washington Government Export Finance Programs Small Business Administration (SBA) Ex-Im Bank of the U.S.

48 Export Finance Counseling
Export Finance Assistance Center of WA (EFACW) Provides export-finance counseling to current and prospective exporters based in Washington State. Export-finance matchmaking by referring SME companies to banks, other lenders, and insurance brokers to support their foreign transactions. Helps clients identify prospective overseas buyers and assess their creditworthiness.

49 Government Export Finance Programs
U.S. Small Business Administration (SBA) Export Express Loan Program International Trade Loan Program Export Working Capital Program

50 Government Export Finance Programs
Ex-Im Bank of the U.S. - Products Support Pre-Export Financing Working Capital Guarantees Post-Export Financing CREDIT INSURANCE Guarantees Direct Loans

51 Payment Methods Cash in Advance Letter of Credit
Documentary Collections Open account

52 Sliding Scale of Payment Risk

53 Basics of Shipping overseas
International Logistics: To ship a product overseas, exporters have at least four options. Many exporters rely on international freight forwarders  to perform these services. Some companies utilize the services of shippers’ associations. Other companies use express delivery or mail services.

54 International Freight Forwarder
A Freight Forwarder is a shipping agent for moving cargo to an overseas destination by air or cargo ships. Also provide services such as: Advising on exporting costs Preparing and filing required export documentation Advising on the most appropriate mode of cargo transport and making arrangements to pack and load the cargo Reserving the necessary cargo space on a vessel, aircraft, train, or truck Making arrangements with overseas customs brokers

55 Wrap-up

56 Criteria for Successful Exporting
Capacity to meet target market product sales Functional Export Business Plan Viable market entry and growth strategies Reliable export performance metrics Ability to meet export compliance requirements Export management commitment & capability

57 WSBDC Export Readiness Centers
SEATTLE EXPORT READINESS CENTER Serving Western Washington Sharon Sappington  (206) SPOKANE EXPORT READINESS CENTER Serving Eastern Washington Vern Jenkins (509) https://export.wsbdc.org

58 QUESTIONS?


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