WHAT YOU NEED TO KNOW TO GO GLOBAL

WHAT YOU NEED TO KNOW TO GO GLOBAL Growing Your Business Globally Symposium PHILADELPHIA, PA OCTOBER 26, 2017 STEPHEN CRESKOFF WHYY Independence Mall West 150 N. Sixth Street Philadelphia, PA, 19106

WHY IS INTERNATIONAL TRADE IMPORTANT TO THE FUTURE OF YOUR BUSINESS? “Every man lives by exchanging” – Adam Smith § International trade currently less important to the U. S. than any other developed economy § But international markets may provide many new customers for your business § U. S. is only 4. 4% of global population and 24. 6% of world GDP § And you may have to compete with foreign competitors in your domestic markets § Many products now sourced overseas because of cost § But U. S. service providers most competitive in world

WHY IS INTERNATIONAL TRADE IMPORTANT TO THE FUTURE OF YOUR BUSINESS? “Every man lives by exchanging” – Adam Smith § U. S. businesses benefiting from international trade: § 61% of Apple’s revenue comes from foreign customers § Walmart’s international revenue is growing much faster than its domestic revenue § UPS’s daily international volume (2. 8 million packages and documents) exceeds daily U. S. volume (2. 7 million packages and documents) § Facebook earns 51% of its revenue overseas § Pennsylvania farmers export more than $2 billion per year, more than one-third of total sales § Hershey Foods, Hershey, Penna. , sells in more than 90 countries

WHY IS INTERNATIONAL TRADE IMPORTANT TO THE FUTURE OF YOUR BUSINESS? “Every man lives by exchanging” – Adam Smith

HOW DO YOU FIND INTERNATIONAL CUSTOMERS/SUPPLIERS? “ Success is walking from failure to failure with no loss of enthusiasm. ” – Winston Churchill Evaluate your product or service for going international § Identical product, lower price? § Unique products? § Related services? E commerce levels the international playing field for small businesses § B 2 B and B 2 C § Internet platforms Work your personal networks Make new contacts Use export promotion agencies

HOW DO YOU FIND INTERNATIONAL CUSTOMERS/SUPPLIERS? Be aware of cultural differences

HOW DO YOU FIND INTERNATIONAL CUSTOMERS/SUPPLIERS? Know how to negotiate international deals Visit them Find a good local representative Never break a rice bowl

HOW DO YOU MAKE SURE YOU GET PAID? “Trust but verify. ” – Ronald Reagan Craft an enforceable agreement § Make sure all provisions are clearly expressed in writing and that the agreement is enforceable § Model contracts Maintain good communication Control your goods and services until payment § Cash in advance § Inco terms (e. g. , EXW, DAP, FCA, CIF) § Letters of credit § Open account (buyer’s creditworthiness, export credit insurance, factoring) Provide for an effective dispute resolution process § Binding arbitration

HOW DO YOU PROTECT YOUR INTELLECTUAL PROPERTY? “Intellectual property has the shelf life of a banana. ” – Bill Gates Identify and protect your IP in the U. S. Investigate IP protection in a foreign market before doing business there Negotiate an agreement that protects your IP Retain local counsel to register your IP Regularly monitor your foreign markets for possible violations and take enforcement action

HOW DO YOU PROTECT YOUR INTELLECTUAL PROPERTY? “Intellectual property has the shelf life of a banana. ” – Bill Gates

HOW CAN YOU MINIMIZE TRADE TRANSACTION COSTS? SPOTLIGHT ON LOGISTICS “My logisticians are a humorless lot – they know if my campaign fails, they are the first ones I will slay. ” – Alexander the Great Some definitions: Trade transaction costs are the additional costs you incur in international trade transactions § Trade finance, insurance, shipping, freight forwarder expense, customs brokers, taxes, fees, local product requirements, etc. Logistics = management of the flow of goods and related services between the point of origin and point of consumption of goods

HOW CAN YOU MINIMIZE TRADE TRANSACTION COSTS? SPOTLIGHT ON LOGISTICS “My logisticians are a humorless lot – they know if my campaign fails, they are the first ones I will slay. ” – Alexander the Great Trade logistics providers include: § § § § § Freight forwarders Customs brokers Insurance firms Express couriers Postal services Customs warehouse operators Trade advisors and attorneys Logistics IT specialists Third-party logistics providers (3 PLs)

HOW CAN YOU MINIMIZE TRADE TRANSACTION COSTS? SPOTLIGHT ON LOGISTICS “My logisticians are a humorless lot – they know if my campaign fails, they are the first ones I will slay. ” – Alexander the Great The Big Steel Boxes

HOW CAN YOU MINIMIZE TRADE TRANSACTION COSTS? SPOTLIGHT ON LOGISTICS “My logisticians are a humorless lot – they know if my campaign fails, they are the first ones I will slay. ” – Alexander the Great Q: How do you handle the logistics for exporting your product? A: “It’s simple. Find a good freight forwarder. ” - President, small equipment manufacturing business located in Southern California

HOW CAN YOU MINIMIZE TRADE TRANSACTION COSTS? SPOTLIGHT ON LOGISTICS “My logisticians are a humorless lot – they know if my campaign fails, they are the first ones I will slay. ” – Alexander the Great Selecting a freight forwarder, some questions to ask: § § § § § Are you a member of the national freight forwarder association? Do you have liability insurance coverage? Are you certified by Customs as an authorized economic operator? Do you specialize in particular commodities? Specific nations? Are you a member of a network of other forwarders? What IT systems do you use and are they compatible with mine? Do you perform customs brokerage services? Do you offer insurance products? Do you provide trade advice? References and credit?

THE FUTURE OF INTERNATIONAL TRADE: TWO PREDICTIONS Global supply chains become more complex, leading to new opportunities for small businesses § Reduced trade transaction costs are resulting in more complex supply chains § Imports of intermediate products represent more than 50% of trade in goods § Small businesses will have a much greater opportunity to participate because of increasing specialization and outsourcing of intermediate inputs § Apple spent over $3 billion with over 7, 000 small business suppliers in 2013

THE FUTURE OF INTERNATIONAL TRADE: TWO PREDICTIONS Cross-border e-commerce expands rapidly § CBEC involves conducting business using e-commerce platforms, but payment and/or deliver can be “offline” (delivery of goods by an express courier) § CBEC can be B 2 B, B 2 C, C 2 C, and B 2 G § Amazon, e. Bay, Alibaba and others provide e-commerce platforms § Individual company websites also facilitate e-commerce

THANK YOU!! Stephen Creskoff & Doram 19881 Naples Lakes Terrace Ashburn, VA 20147 USA Tel: 703 729 7459 Email: stephen@creskofftrade. com Website: www. creskofftrade. com