exportkenya

ExportKenya

Exporting to the USAJob Dieleman

International Trade Center/SBDC

University of Georgia

Athens, GA, USA

jdieleman@sbdc.uga.edu

706/542-6661

Agenda

Overview US market and trends Export readiness American business culture Researching the US market Importing into the US IP Protection Other things to know

OVERVIEW US MARKET

Why do business with the USA?

world’s largest economy (US$ 10 trillion) 293 million people - $38,000 GNP/person relatively homogeneous population/culture relatively open economy consumer/market driven single regulatory system English speaking

But the US is also the most competitive market in the

world!!

US buyers/consumers have a choice from the best and most

(price)competitive products and services from anywhere in the world

GLOBALIZATIONGLOBALIZATION

What is it?

What are the trends?

Reduced barriers to trade Increased transparency through advanced

information technology Increased competition Very competitive pricing! Large US retailers going direct Consolidation

US Apparel Retailers

Walmart Lord & Taylor The Gap Target J. Crew Ann Taylor Abercrombie & Fitch Eddie Bauer J.C. Penney

30 retailers account for over 95% of US apparel sales in publicly held retail outlets

Average US family of four spent $1831 on apparel in 1999 (per capita all retail spending was $8,542 in 2003)

How do they compete?

Pricing Outsourcing Branding Differentiation Rapidly changing styles/colors Lean and efficient supply chains Sales through the internet Retailers are selling globally

US Crafts/Gifts Retailers

TJ Max Pier 1 Imports Ross Target Ten Thousand Villages Hobby Lobby Grand Harbour

Why should you be global?

Global companies:– are less likely to fail– are more profitable– pay higher wages and benefits– create more jobs

Do you have a choice?

You can no longer totally rely on the Kenya market, because

Kenya is increasingly becoming an export market for the rest of

the world!

EXPORT READINESS

Are you export ready?Are you export ready?

Self Assessment

Are you ready to tackle the US market?

Are you a successful company?– Exported regionally or to other parts of the

world?– Solid track record in Kenya?– Are you financially healthy?– Does your business’s profitability compare

favorably with others in your industry?

Are you ready to tackle the US market?

Is your product/service competitive?– Is your quality consistently high?– Are you ready to compete with foreign

products in terms of quality?– Are you ready to compete with foreign products

in terms of cost?

Are you ready to tackle the US market?

Are you committed?– Is top management committed?– Do you have a strong management team in place?– Can you focus on long-term goals?– Are you comfortable taking new risks to grow

your business?– Are you willing to adapt your product to

regulatory /cultural requirements of the US market?

Are you ready to tackle the US market?

Are you willing to increase production capacity to meet US demand?

Do you have somebody with overall responsibility for the US market?

Can this person adapt to the US business culture?

Are you ready to tackle the US market?

Do you have a local support structure in Kenya ?– International bank– Freight forwarders– International lawyer– Government (EPC, Ministry Industry & Trade)– Other Exporters

AMERICAN BUSINESS CULTURE

What is it like to do What is it like to do businessbusiness

with Americans? with Americans?

Iceberg Concept

Values Comparison Kenya-US

Time…….………..…….…RelationshipIndividualism……....Group OrientationEquality……………..……….HierarchyCompetition…….……..…..CooperationChange……….…......Stability/TraditionControl……….……..……………...FateDirectness…….………..…..IndirectnessFuture……………..………………..PastInformality…………..…….....Formality

Quotes from:AMERICANS at WORKAMERICANS at WORK

A Guide to the Can-Do PeopleA Guide to the Can-Do PeopleCraig Storti

2004

www.interculturalpress.com

Understanding US Culture

– “Americans have no doubt that if they want something bad enough and if they are willing to work hard enough, there is nothing they cannot achieve”:

nothing is impossible! you control your own destiny! self reliant! focused on the future!

Understanding US Culture

“Americans have an unshakable belief that they will prevail regardless of circumstances, and that somehow everything will work out”– Americans are upbeat and optimistic– Americans are risk takers … and accept

mistakes

Understanding US Culture Americans have a strong drive to achieve

– “Americans derive self respect and the respect from others in large part from their accomplishments”

– It is important to show accomplishments- “If it ain’t broke, fix it anyway”.

– Money is an important measurement of achievement.– Americans like to compete to win!– Americans are obsessed with efficiency!– Americans are focussed on getting things done (results).

Understanding US Culture

American communication:– Americans are direct talkers/candid– High and low context societies– Impatience with details- Get to the point!– Need just enough information to make a

decision

What does this mean to you What does this mean to you in a practical sense?in a practical sense?

Doing Business with Americans

A positive attitude:– “Always sound positive”– “Be enthusiastic about solving problems”– “Don’t worry about making mistakes”– “Never suggest giving up”– “Focus on results and getting things done”– “Never complain or make excuses”– “Don’t act worried about taking risks”

Doing Business with Americans

Communication:– Always respond to e-mails within 1-2 days– Return phone calls within a day– Get to the point quickly!– Present practical information (examples,

illustrations - no theories or abstract concepts)

Meeting with Americans

Set up appointments well in advance Confirm appointments the day before Do not arrive at an office unannounced Get people’s attention right away! Don’t overrun your allotted time - ending it

early is ok

Meeting with Americans

Make sure you are prepared:– Market research– Professional presentation: business

cards/brochures/website– CIF pricing in US $ currency for different quantities– Delivery lead times (production, shipping)– Production capabilities (modifications, packaging,

sizing, etc.)– Samples

Meeting with Americans

– Payment terms– After-sale service, warranties– Performance test results (if applicable)– Convert metric to US specs– Know the import regulations

Meeting with Americans Prices are negotiable Involve lawyer to check any significant contracts

reached Make sure you clarify what you understand to

have taken place at the meeting/ confirm by e-mail right after meeting

Fast and comprehensive follow-up is essential Promised delivery dates and production quantities

must be honored.

Marketing in the USA

Do not promise what you cannot deliver. Inform of problems as early as possible and suggest solutions.

Think segmentation:– regions– ethnic groups:African/American, Hispanics,

Asians– demographic groups/ lifestyle– niche markets Am I your target?

Marketing in the USA

Sending letters only has limited effectiveness/ Object is to meet face to face.

Safety and quality standards:– some of the most stringent standards and regulations in

the world– US consumers are used to choosing from the best and

cheapest products in the world Pricing:

– severe price competition for most products and services

Marketing in the USA US has many layers of government:

– federal, state, county, city Maintenance and after-sale service:

– consumers expect excellent maintenance and service of products

– law imposes that products work as advertised and intended A litigious society:

– more lawyers and suits than any other country– be careful for product related lawsuits

Marketing in the USA

A legalistic society:– sales contracts– distributor agreements

RESEARCHING THE US RESEARCHING THE US MARKETMARKET

What do you need to know?What’s the US market like?

Can you compete?

What is it going to take?

What are the barriers?

Can you compete?

Competition: companies, products, prices Existing distribution channels Sales terms: delivery, service, payment,

warranties Regulatory compliance: labeling,

standards, packaging, liability, etc.

Are you price competitive?

What are the costs that need to be considered?

Cost Factors

Int’l promotion Inland Kenya freight Ocean/air freight Marine/air insurance Export preparation

– modification

– packaging/labeling

Forwarder fees

Regulatory compliance: standards, testing, inspection

US Import duties Distribution channel

markups Bank, legal fees Transaction financing Exchange rate

Costing worksheet

Calculate cost of your product from Kenya to USA retailer

Sources of Information: Armchair approach

– Export/import stats: www.strategis.ic.gc.ca - Trade Data Online

– Internet: broad search Apparel Search- Online Guide

(www.apparelsearch.com/associations.htm Plunkett’s Apparel & Textile Industry Almanac

(www.plunkettresearch.com/apparel) Lexis/Nexis, Gale Research Fashion Industry Info (www.infomat.com)

– US Industry Associations: American Apparel and Footwear Assoc. Aid to Artisans (www.aidtoartisans.org) Gift Association of America (www.giftassn.org) National Association of Gift and Collectible

Retailers (www.naled.org)

– Industry Magazines: The Craft Report (www.craftsreport.com) Apparel Magazine (www.bobbin.com/buyersguide)

– Local Kenya support structure: private/government

– Other exporters to US (complimentary products sold to same industry)

– Suppliers, customers

– Network! Be creative!

– Company info: Dun &Bradstreet (www.dnb.com/us/) Hoover’s Online (http://premium.hoovers.com) InfoUSA (www.infoUSA.com) Thomas Register (www.thomasnet.com) Yellow Pages (www.yellowpages.com) Switchboard (www.switchboard.com)

– Look at their websites!

Travel Approach

If your armchair research indicates that you may be competitive, then visit the US market:– Select and attend/exhibit at a US trade show

– Participate in trade mission/matchmaker program

– Find potential US partners who are well established in your industry!

– Visit and survey US retailers

Partners

Indirect sales Direct sales Agent/rep Distributor Licensing Joint

venture/subsidiary

Profit? Credit risk? Control price? Promotion? Sales volume? Risk/commitment?

Importing into the USA

WWW.CUSTOMS.GOV

WWW.AGOA.GOV

WWW/CUSTOMS/GOV/XP/CGOV/TOOLBOX/PUBLICATIONS

Click on:

Importing into the United States

- A Guide for Commercial Importers

Duty Assessment

Step 1: Identify Schedule B Harmonized Classification number (10 digits):

– www.census.gov/scheduleb Complete description of goods Method of manufacture Specifications and analyses Quantities, weights

Duty Assessment

Step 2: Find duty rate in US Harmonized Tariff Schedule

– www.customs.gov, click on “importing”, click on “Harmonized Tariff Schedule”

– Special Tariff Treatment- in the Special column System of Preferences: A, A*, A+ AGOA: D

– AGOA Textile Certificate of Origin– Duty is only payable on product value

Duty Assessment

Apparel: HTS Chapter 98 Crafts:

– Up to 20 Different HTS Chapters What are they made of? What is the function?

AGOA

AGOA expands benefits already available under the GSP program to a broader range of products – 1835 products will have symbol “D” inserted in the

“Rates of Duty 1- Special” column. Qualify if product is growth, product or manufacture of:

a beneficiary sub-Saharan country imported directly from one of these countries meets a value-added requirement is not import-sensitive

AGOA Preferential Treatment for Certain Textile and Apparel Articles

Six broad categories– see AGOA Textile Certificate of Origin

Questions?– Customs Textile Team 404/675-1310

– Informed-compliance publication www.customs.gov

– African Growth and Opportunity Act Implementation Guide (www.agoa.gov)

– Office African Affairs, Washington (tel. 202/395-9514, fax. 202/395-4505)

– US Embassy in Nairobi

Regulatory Issues

Quotas are gone! (Jan 1, 2005) Country of origin marking Textile products labeling:

– generic names and % by weight of fibers– manufacturer/identification # /trademark– country of origin

Products subject to regulations by various other US agencies

Customs Invoice Requirements

The invoice is the most important import document. It must provide:– Port of entry– Names and place of buyer and seller– Quantities in weights and volumes– Purchase price of each item in the currency of

the sale– Kind of currency

– State all separate charges (itemized by name and amount) including freight, insurance, commission, cost of packing

– Country of origin

Shipping to the US

Regular mail– all mail is examined by Customs– duty and fees paid by buyer upon delivery in US

Express mail– express company clears at customs (for a fee)

Freight shipments– Air/ocean– Freight forwarder– Informal/formal entry (over $2000)

Trademarks, Trade Names, Copyrights

US Customs checks for counterfeit trademarks or copyright infringements– parallel imports– subject to seizure

Provide US Customs with a certified copy of your certificate of registration issued by the US Patent and Trademark Office

Trademark, Trade Name Protection

US Patent and Trademark Office (www.uspto.gov)

Where to start? (www.uspto.gov/web/trademarks/workflow/start.htm)– Do a search (on-line)

– Describe goods/services with which mark will be used

– Clearly depict your mark

– File trademark application (on-line)

Copyright Protection

Www.copyright.gov Copyright is secured automatically when

the work is created, but registration has definite advantages

Registration procedures on-line

Other things to know

INCO Terms (Int’l Commercial Terms) Pro-forma invoicing International payment options

INCO Terms

13 INCO terms Defines the responsibilities/risks/costs of

buyer and seller Use of INCO terms avoids confusion,

delays and unnecessary risks

INCO Terms

EXW DDU CFR

FCA DDP CIF

CPT FAS DES

CIP FOB DEQ

DAF

Pro-Forma InvoiceFormal price quotation

Identify all costs (develop costing sheet) Learn about 13 INCO terms Do it right! Pro-forma is used to:

– draw up sales contract– request import license– draw up a Letter of Credit

Which Payment Term is best?

Cash in Advance ?

Open Account ?

Cash against Documents ?

Unconfirmed Letter of Credit ?

Confirmed Letter of Credit ?

Exporting is not rocket science !

Plan and prepare !

Focus on marketing and strategy! Find a niche!

Find a US partner !

Build a support team to advise you on the mechanics!

Questions?