How to Seize Export Opportunities |
Trade Africa textbook How to Seize Export Opportunities An Export Guide for SMAs in Southern Africa Compiled by Henry Kachaje | 1 2 | Trade Africa textbook Trade Africa textbook | 1 2 | Acknowledgements The compilation of this Export Guide is the sum effort of many individuals to whom I am very grateful. Special recognition goes to the German Development Cooperation and InWEnt for financing the “Trade Africa Intra Region Export Promotion Program” and to Dr. Astrid Mühlböck, who developed the original training materials, which formed the basis for the development of this guide. I also wish to extend my gratitude to the Trade Africa Program partners and trainers in the participating countries who reviewed the first draft of this guide and gave lots of valuable input. Special thanks go to Foster G. Nyirenda and Robert Salama for their valuable contributions and editing of the publication. Thanks to Fyness Zachepa and Thandi Chitaukali for all the typing work! Henry K. Kachaje Business Consult Africa (BCA) Blantyre, Malawi July 2004 Trade Africa | 3 How to Seize Export Opportunities An Export Guide for SMEs in Southern Africa Compiled by Henry Kachaje 4 | Preface … … … … … … … … … … … … … … … … … … … … … … … … vi Introduction … … … … … … … … … … … … … … … … … … … … … … vii About the Export Guide … … … … … … … … … … … … … … … … … viii Chapter One: Business Readiness for Exporting 1.1 Are you ready for the Export Market? … … … … … … 1.2 Benefits and Risks of Exporting … … … … … … … … 1.3 Deciding What and Where to Export … … … … … … 1.4 Developing a Business Plan … … … … … … … … … … 1.5 Understanding your Export Market Environment … … 1.6 Regional Economic Integration: SADC and COMESA 1.7 General System of Preferences (GSPs) … … … … … … 1.8 African Growth and Opportunity Act (AGOA) … … … 1.9 World Trade Organization (WTO) … … … … … … … … 1.10 Cross-border Trade … … … … … … … … … … … … … 1.11 Export Readiness Checklist … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … …4 …5 …6 …7 11 12 15 15 16 16 18 … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 26 27 28 30 31 33 33 35 35 35 Chapter Two: Export Marketing 2.1 International Marketing / Export Trade … … … … 2.2 Barriers to Export Trade … … … … … … … … … 2.3 Export Market Research … … … … … … … … … 2.4 A Step-by-Step Approach to Market Research … 2.5 Developing an Export Market Plan … … … … … 2.6 Export Trade Promotion Tools … … … … … … … 2.6.1 Trade Fair Participation … … … … … … … … … 2.6.2 Buyers-Sellers Meeting … … … … … … … … … 2.6.3 Trade Missions … … … … … … … … … … … … 2.6.4 Trade Partnership … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … table of | 5 contents Chapter Three: Export Financing and Insurance 3.1 3.2 3.3 3.4 3.5 Export Finance … … … … … … … … … Sources of Export Financing … … … … Terms of Payment for Export Orders … Exchange Rate Risk … … … … … … … Insurance … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 38 38 39 40 41 Chapter Four: Quality 4.1 Quality Systems … … … … … … … … … … … … … … … … … … … 44 4.2 Quality Readiness Checklist … … … … … … … … … … … … … … 47 Chapter Five: Transport and Logistics 5.1 5.2 5.3 5.4 Forms of Transport … Distribution Channels Export Regulations … Incoterms 2000 … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 50 50 52 53 Annexes Annex 1 Institutions and Contact Persons for the Trade Africa Program … … 60 Annex 2 List of Relevant Websites for Exporters … … … … … … … … … … … 61 Annex 3 List of Publications Relevant for Exporters … … … … … … … … … 63 6 | PREFACE One main obstacle for the export economy of southern African countries is the lacking synchronization of local and regional markets. However, an adaptation of export products to market requirements flanked by proper marketing efforts opens a range of business opportunities for small and medium enterprises. In view of these so far largely untapped opportunities InWEnt - Capacity Building International, a major German organization for international human resources development, advanced training and dialogue - initiated the project “TRADE AFRICA Export Promotion” in Malawi, Mozambique, South Africa, Tanzania, a nd Zambia in the year 2002. It is comprising training activities for entrepreneurs and marketing specialists of companies, support of export promotion agencies, setting up an intra-regional network of trainers, export-oriented businesses and national promotion agencies and organizing an intra-regional Buyers-Sellers-Meeting with more than 350 company representatives from the five project countries in the SADC region. This Export Guide is one of the concrete results of the pilot phase of the project. Based on the training material, adapted to the needs of the enterprises and completed with the trainers’ and enterprises’ practical knowledge the Export Guide aims to assist and motivate others to start exporting activities within the SADC region and possibly into the world market. Peter Nagel (Head of Department 4.04) Lydia Jebauer-Nirschl (Project Manager) preface introduction | 7 INTRODUCTION With globalization and regionalization, the opening of world markets offers economic opportunities for Southern African countries and at the same time exposes them to new challenges. Experts agree that a strong export sector is a crucial factor for the future economic development of any country. The trade potential for Southern African countries is promising. The International Trade Centre estimates it at around 1 billion Euro for the coming years. Globalization and regionalization go hand in hand when seizing market opportunities. Competitiveness generally depends on two factors: orientation of an enterprise towards global markets and establishing firm regional business roots. One main obstacle for the export economy of the Southern African region is the lacking of synchronization of regional markets and demand orientation of marketing strategies. Flexible small and medium-scale enterprises answering to market demand will have good business opportunities. The harmonization of regional markets also increases the international competitiveness of enterprises in Southern African countries. If the countries in the Southern African Region can do more trade with each other there is more potential to increased trade within the region especially that most of these countries are signatories to either the Southern Africa Development Community (SADC) and/or Common Market for East and Southern Africa (COMESA) trade protocols. 8 | F I G U R E 1: I N T E R R E L AT I O N OF CHAPTERS Business Readiness For Exporting • • • • • • Business Plan AGOA WTO Cross Border Trade SACC & COMESA Trade Agreements Transport & Logistics • • • • • Forms of Transport Export Regulations Cross Border Trade INCO-TERMS Distribution Channels Export/Marketing • • • • • • • Market Research Barriers to Export Trade Non-Tariff Trade Barriers Trade Mission Buyer-Seller Meeting How to Seize Export Opportunities Quality Financing Exports, Insurance • • • • Dimensions of Quality Qualtiy Systems Cross Border Trade Qualtiy Checklists • Needs and Specific Cirumstances • Insuring Exports • Terms of Payment • Exchange Risks Header Header Header Header Header Header Header Header • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy about t h e e x p o r t g u i| d 1e ABOUT THE EXPORT GUIDE This Export Guide has been compiled from materials originally developed for the “Trade Africa Intra-Regional Export Promotion Program” – financed by the Federal Ministry of Economic Cooperation and Development (BMZ) executed by InWEnt with the assistance of the Partnership APPLICATIO / DIALOG - that was undertaken as a pilot project in Malawi, Mozambique, Tanzania, Zambia and South Africa in 2002 – 2003. The Export Guide which is targeted for use by Small and Medium Enterprises (SMEs) in Southern Africa aims to equip both potential and existing exporters in the region with knowledge and tools to enable them to identify and seize trade opportunities that are available to them. The guide begins by discussing fundamentals of exporting and leads the reader to other services facilitating export trade. Chapter 1 discusses major factors on which export business hinges such as making an informed decision to export; the importance of developing a business plan and understanding the export environment in which one will be operating. Chapter 2 focuses on what is required to undertake in export marketing taking into account macro-economic factors and other specific issues the exporter will have to deal with. Chapter 3 discusses financing of exports and insurance in view of its important role in export business. Chapters 4 to 6 focus on quality, transport, logistics, tools and checklists. These are all important ingredients in export business. CHAPTER 1 2 3 4 5 A 2 •|• • • • • PART 1 3 4 5 6 7 8 9 10 11 ••••••••• • 1.1 Are you ready for the Export Market? … … … … … … 1.2 Benefits and Risks of Exporting … … … … … … … … 1.3 Deciding What and Where to Export … … … … … … 1.4 Developing a Business Plan … … … … … … … … … … 1.5 Understanding your Export Market Environment … … 1.6 Regional Economic Integration: SADC and COMESA 1.7 General System of Preferences (GSPs) … … … … … … 1.8 African Growth and Opportunity Act (AGOA) … … … 1.9 World Trade Organization (WTO) … … … … … … … … 1.10 Cross-border Trade … … … … … … … … … … … … … 1.11 Export Readiness Checklist … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … …4 …5 …6 …7 11 12 15 15 16 16 18 | 3 Chapter One BUSINESS READINESS FOR EXPORTING 4 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • CHAPTER 1: BUSINESS READINESS FOR EXPORTING Are you ready for the Export Market ? Is your company ready to export? Does it have the right product, the capacity and resources to successfully get into the export market? Unless you are sure your company is ready for the export market, it is not wise just to rush into exporting and think that your company can succeed. Below are some of the critical factors that a business must consider when planning to export. Setting Clear Objectives Clear objectives must be set to justify the decision to go into the export market. A business must understand and look at the export business as a long-term commitment. The following questions will act as a quick checklist to assess the firm’s readiness to export and assist in formulating clear objectives. 1. What are the company’s reasons for pursuing export markets? Are they solid objectives? 2. How committed is top management to an export effort? 3. Is exporting viewed as a quick fix for a slump in domestic sales? Will the company neglect its export customers if domestic sales pick up? 4. What are management’s expectations for the export effort? 5. How quickly does management expect export operations to become self-sustaining? 6. What level of return on investment is expected from the export program? 7. Are any domestic customers buying the product for sale or shipment overseas? If so, to which countries? 8. Who are the main domestic and foreign competitors? 9. What general and specific lessons have been learned from past export attempts or experiences? 10. What in-house international expertise does the business have (international sales experience, language capabilities, etc.)? 11. What organizational structure is required to ensure that export sales are adequately serviced? 12. What amount of capital will be required and can be committed to export production and marketing? 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • | 5 Benefits and Risks of Exporting There are several benefits and risks that should be considered when a business makes the decision to export. Any business venture involves certain risks and exporting is no exception. Exporting involves not only the normal risks of a domestic sale but also the risks associated with doing business in a foreign country. Most of the risks from exporting can actually be minimized or even eliminated with careful planning and effort. Simply by knowing what the potential risks are, a potential exporting business will be able to make a better decision. Obviously, the benefits and risks will vary from one business to another, depending on product, company, the target country or region, and other variables. The best way to determine the possible risks and advantages is to first consider general risks and benefits and then consider how they affect your company in the particular case under review. If the benefits out-weigh the risks, the business may proceed with plans to export. You should make the decision to export only after weighing the risks and benefits and deciding that your company is willing and capable of expending the effort to make exporting a success. Below are some examples of the benefits and risks of exporting. Benefits Risks • • • • • • • The demand for the product in the export market may dry up before profits are realized • Competition from other similar products in the export market • Export business usually requires additional financing to fund the export business, which may flop • Longer wait for payments and difficulty in collecting export proceeds • Possibility of non-payment for products received by importers • Expense of developing new promotional materials, which may not improve product awareness • Subordinates short-term profits to long-term gains. • Product may not reach the export market due to transit bottlenecks such as pilferage, theft and other non– tariff barriers • Expense of modifying products and/or packaging for export, which may not be liked by consumers in the export market • Political and cultural risks may affect the demand for the product • Unpredictable fluctuations in exchange rates of currencies • • • • Enhance domestic competitiveness of your products Increase sales and profits Gain global market share Earn foreign exchange for the country Reduce dependence on domestic markets Enhance production efficiency by using excess capacity or by expanding production capacity to benefit from “economy of scale” Expand company awareness of other similar products worldwide Take advantage of the undervalued national currency Escape inflation and further devaluation of local currency by earning foreign currency Export forces companies to improve quality and design of their products, this helps obtaining a larger market share also on the domestic market 6 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • CHAPTER 1: BUSINESS READINESS FOR EXPORTING Deciding What and Where to Export After analyzing the risks and benefits involved obtain adequate (sufficient and reliable) informawith the export business, another critical step is tion about your target export market, country X. deciding which products to sell and where to sell Research may reveal that country X has a great them. It is advisable to narrow your choice of po- market for cane chairs, has no cultural factors tential export products to two or three. More than that would cause problems, has a population that three potential products will require a significant buys lots of cane chairs, has a stable government amount of research, and some products will be and no quotas prohibiting entry of your product, much harder to research than others. Deciding and has a great infrastructure supporting delivery which product you will export will involve ansof your products. wering a number of questions, which can be very Or you may discover that country X is not a good time-consuming even with only three potential location to sell your cane chairs but would be a products. good place to sell palm Similarly, deciding leaf baskets, while counwhich country to sell try Y is a great place to Selling on the domestic market helps your export products the company to prepare for the sell cane chairs. Thus, you to, will be far easier if may start out researching export market by providing insight you start examining into a number of key issues such as: the possibility of exporonly two countries ting a particular product and comparing them. to a particular country (i) Nature of product – whether the If you choose to look and end up discovering product will be able to meet the at more potential needs and expectations of consuthat a different product target countries, you would sell better in your mers (ii) Packaging will need a lot of target country or that (iii) Production and quality control time, because country another country would be (iv) Promotion and research is probably a better place to sell your the most time-consuproduct. distribution aspects (v) Demand and ming and expensive There are many questions part of exporting. you will have to answer customer satisfaction. Most experts recomin order to choose your mend targeting only product, unless you have chosen already. Even if one country at a time until you have learned the market and established you think you know which product you want to a presence there. sell, keeping an open mind may help you be more To some degree, selecting a product is dependent profitable in the long run. The great product that upon the selection of a market, and vice versa. sells very well in your domestic market, may not For example, you may not know that your line sell in the country of your target export market, of products is ideal for you to export until you not because it is suddenly a bad product, but 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • | 7 Developing a Business Plan because there may be cultural issues, packaging considerations or other problems preventing your product from succeeding at that time. Be prepared to put something aside for a while to check again later; markets change sometimes very rapidly. You should also be wary of assumptions you may be making about whether you should sell your product abroad. Assumptions often masquerade as common sense beliefs about whether your product will sell. For example, you would probably assume that it would be impossible to sell snow in Iceland or chopsticks to Asian countries. Common sense tells you that people in Iceland wouldn’t need or want to buy something they have piles of, and that the chopsticks market would be saturated in countries where chopsticks are used daily. In deciding which product to export, note your assumptions and consider whether those assumptions might be preventing you from exporting something that might actually be well received. Export readiness should start with the domestic market. Any company that is contemplating of going into export business should first succeed on the domestic market before attempting to go on the export market, unless a product is designed from the outset for a particular export market. (Arabic long dresses for men being exported by companies in Thailand to Saudi Arabia and other Gulf States. In Malawi there might not be a market for dried banana chips, but they can be exported to Europe!) It is highly advisable for a company to develop a business plan of its export initiative. The importance of a comprehensive and thoughtful business plan cannot be overem- Before you begin writing your business plan, consider four core questions: 1. What service or product does your business provide and what needs does it fill? 2. Who are the potential customers for your product or service and why will they purchase it from you? 3. Do they have the financial means (purchasing power) to pay for the products or services your company will be offering? 4. How will you reach your potential customers? 5. Where will you get the financial resources to start your business? phasized. After an export market research is completed and the company decides to go into export business the next step is to develop a sound business plan. The main objective of a business plan is to create an organized view of the export business. In a nut shell a business plan is a description about what a company wants to do, how, when and where. It is a sort of a road map to the export business. The business plan can assist in sourcing outside 8 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • funding and credit from suppliers, assessment of management of the business operation and finances available, promotion and marketing of your business and achievement of goals and objectives of the business. CHAPTER 1: BUSINESS READINESS FOR EXPORTING An important aspect of a business plan is that it shows the economic feasibility (profitability or otherwise) of the business under consideration. There are different formats used when writing business plans depending on its use and sector of the business. Business Plan Formats There are different formats used when writing a business plan depending on its use and sector of the business. Below are some common elements that constitute a business plan: • • • • • • • • • • • • • • • • • • Table of Contents Executive Summary Introduction Economic Framework Market Analysis Marketing Strategy Operations Management Plan Financial Analysis Table of Contents Executive Summary Introduction Economic Framework Market Analysis Marketing Strategy Operations Management Plan Financial Analysis • Table of Contents A table of contents outlines what is contained in the business plan. It makes it easier for readers to find what interests them most. • Executive Summary The executive summary which should not be more than two pages is a synopsis of the business idea. • Introduction The business plan is to be introduced in this part, which means to give an overview of the idea, objectives and aims of the project presented in the business plan. • Economic Framework This section describes the general economic conditions for the project, i.a.: – Current business conditions such as domestic and international economic and political conditions which may affect your company’s ability to do business. Such factors as recession 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING – – – – 1 2 3 4 5 6 7 8 9 10 11 •••••• trends, interest and foreign exchange rates, demand and sales trends, government policies, etc. are very important and should be taken into account. You must have a good understanding of the industry you will be operating in terms of industry trends and possible influence in your business. Evaluation of your competitors. It is necessary to know your competitors, their strengths and weaknesses to enable you to develop strategies to take them head on. If possible explain your market niche if any, your competitive strategy and tactics you will use to capture market share. Evaluation of legal implications e.g. licensing, taxes, etc. You should have a thorough knowledge of macro-economic issues. 1.5 Marketing Strategy The marketing plan is one of the most important sections of the business plan because it outlines the strategies you will adopt to sell your products / services to your target consumers / market. It covers the 4 P’s namely Product, Price, Place and Promotion strategy. (i) Product What product(s) or services are you going to offer? Describe product specifications, e.g. packaging, design, size, amount, etc. Header (ii) Price • Copycopy How do you plan to sellcopy your products/service? • Copycopy copy What prices will be charged? What will be the • Copycopy copy • Copycopy copy overall price strategy and your sales terms to • Copycopy copy • Copycopy copy capture market shares and to win customers? • Copycopy copy Will there be refunds for early clients or discounts for large orders. What markups will be adopted taking into account the industry markup, consumer demand, your competitor’s prices and sales terms? •••••••••• • | 9 You have to be careful when deciding the price for your product/service otherwise you may either overprice or underprice your products. (iii) Place What distribution system will be adopted? For example will the product be exported directly to end users, agents, importers or to wholesalers? Where is the service going to be offered? (iv) Promotion What will be the promotion strategy for the product? Will it be through the news papers, radio, television, direct mail (leaflets), exhibition (trade fairs), samples giveaways, press releases, contacts/referrals (word of mouth), etc. Assess the cost of each media and its impact in terms of creating and enhancing product awareness. F I G U R E 2: K E Y S E C T I O N S OF A BUSINESS PLAN Financial Aspects Company Mission Company Data Information Product & Service Fact about the COMESA REGION Persernal Data on Owner Marketing Strategy Future Programs Human Resource Aspects 10 | 1 2 3 4 5 A 1 2 3 4 5 6 7 8 9 10 11 •••••• •••••••••• • 1.6 Operations In this section you should describe the following: – Capacity and production schedules. This covers manufacturing process, if any, and quantities to be produced. – Cost and inventory controls. Explain how you are going to control flow of raw materials, work in progress, finished goods etc. including costs. You should know the sources of raw materials, qualities, prices, payment THE FOUR P OF MARKETING Product What product ( s ) to offer Place The distribution system to be adopted Markting Strategy Price At what price to sell, for examle will there be refundes for early cleints OR discounts for large orders. Promotion What will be the promotion stragtegy for the product, will it be through the radio, TVs, small leaflets etc. Figure 3: Marketing Strategy Header Header Header Header Header Header Header CHAPTER 1: BUSINESS READINESS FOR EXPORTING conditions etc. including mode of transport you are going to use in your business. – Invoicing and collections. Come up with a clear policy on how you are going to invoice customers and collecting payments and – Human resources requirements. Explain your staff requirements stating their job descriptions, specific training needs, salary schedules and performance evaluations. 1.7 Management Plan It is important to have the right people to do the job. Therefore, a management plan is critical to your business plan because it gives you a clear picture of your management’s strengths and weaknesses. Outline the organizational structure including functions of each key personnel and include curricula vitae. 1.8 Financial Analysis The focus of this section is to put together proforma (projections) financial statements of your business such as income statements for the next three Header years, cash flow statements and balance sheet. It • Copycopy copy includes capital required to embark on the export • Copycopy copy Copycopy copy business and how to finance it. ••Don’t forget Copycopy copyto • copy include all costs and revenues to• Copycopy be considered for Copycopy copy • Copycopy copy the planned business. The business plan should not be considered as a „burden“, as an unnecessary effort which has to be done to get the required loans from the Header financing sources. It is an essential tool for the • Copycopy copy Copycopy copy of the company itself to clarify •the feasibility • Copycopy copy planned operations. • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy Further information can e.g. be found at: • www.sba.gov/starting/indexbusplans.html • www.bplans.com • www.businessplans.org/ 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING •••••• 1 2 3 4 5 6 7 8 9 10 11 • • • • • • • • • • • | 11 Understanding your Export Market Environment The export market environment is becoming more competitive than before due to globalization of trade. A thorough understanding of the export market environment is essential to be able to make sound business decisions. Thus issues relating to trade agreements and opening up of markets such as AGOA, COMESA, etc. need to be understood in order to be competitive and exploit the existing market opportunities. Trade Agreements and Protocols: What are trade agreements, and why are they important? Trade agreements are either bi-lateral (between two countries) or multi-lateral (among more than two countries). Trade agreements are usually entered into in order to stimulate trade between the contracting parties. Trade agreements do this by allowing goods from one of the contracting parties to enter the market of the other(s) e.g. at no duty or at a reduced rate of duty. In many cases access is reciprocal, but not always (e.g. the Cotonou Agreement). It is also normally the case that the trade agreement would stipulate which goods and services qualify to utilize its provisions, and which don’t. This is usually enforced through a “rules of origin” section in the trade agreement. Exporters and importers wishing to utilize the provisions of a trade agreement would usually be required to produce rules of origin certificate by the controlling authorities. The rules of origin certificates are usually issued by the exporter’s customs authority (for example, this is a requirement of the Cotonou Agreement) or by another recognized authority such as the Chamber of Commerce (this is allowed under the COMESA Agreement). Trade agreements stimulate trade between the contracting parties because they allow the qualifying products from the beneficiary|exporting country to enter the market in the target country at a price similar to that charged by local producers, and lower than competing products imported from countries that are not party to the agreement. As price is often a major consideration for consumers to switch to your product, especially when it is entering the market for the first time, the advantage of trade agreements cannot be underestimated by either exporting companies or export promotion facilitators. Therefore, the first thing that a company intending to enter a new market, should do is to check if any trade agreement applies, and if one does, what is needed in order to qualify under its provisions. Most trade agreements have their own unique definition of what constitutes local content, and what is required to meet these and/or the other qualifying requirements. In some cases a country may have a number of different agreements, which provide different opportunities for the exporter who may not qualify under one agreement, but may still enter that market under another agreement. Although this may at times create problems in terms of interpretation and implementation, the advantages far outweigh the disadvantages. (Further details refer to Summary of Trade Agreements, Table 2). 12 | 1 2 3 4 5 A 1 2 3 4 5 6 7 8 9 10 11 •••••• •••••••••• • CHAPTER 1: BUSINESS READINESS FOR EXPORTING Regional Economic Integration: SADC and COMESA Regional economic integration such as SADC and COMESA in addition to bilateral agreements between different countries offers market opportunities in the region. The proximity of the markets also offers importers and exporters the opportunity to quote at competitive prices and to deliver in time. However, because of the similarities of the characteristics of the markets exporters must be prepared to face stiff competition from other producers in the region. This calls for the need to come up with a unique or distinguished product / service taking into account quality, timely delivery, favorable mode of payment and sustainability of export business. Southern African Development Community (SADC) SADC superseded the Southern African Development Co-ordination Council (SADCC). Membership comprises Angola, Botswana, Malawi, Mauritius, Mozambique, Namibia, Lesotho, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. SADC’s overall objective is to increase market access of products produced within member countries so as to improve living standards of the population. To achieve this, governments used a sectoral approach with the realization that economies of SADC member countries were not at par. Since its inception in 1992, a number of developments have taken place including the signing of SADC Trade S A D C M E M B E R S TAT E S Victoria Kinshasa Daar es Salaam Luanda Lusaka Lilongwe Harare Windhoek Gaborone Pretoria Maseru Port Louis Maputo Mbabane Cape Town Figure 4 showing SADC Member States SOUTH AFRICA D E M O K R AT I C REPUBLIC OF CONGO NAMIBIA ANGOLA B OT S WA N A TANZANIA SYCHELLES M A L AW I ZAMBIA ZIMBABWE MOZAMBIQUE MAURITIUS S WA S I L A N D L E S OT H O 1 2 3 4 5 A •••••• CHAPTER 1: BUSINESS READINESS FOR EXPORTING Protocol in Maseru, Lesotho on 24th August 1996. With a population of 190 million and a GDP per The specific ultimate objectives of the SADC Trade Protocol include: (i) Increasing intra–region trade through trade liberalization. (ii) Enhancing economic development in member countries. (iii) Efficiency in resource production, allocation and utilization and (iv) Creation of a free trade area. 1 2 3 4 5 6 7 8 9 10 11 • • • • • • • • • • • | 13 which have hitherto been inhibiting trade such as tariff and non–tariff barriers. This will be undertaken through a phased approach to accommodate issues related to sensitive products. Common Market for Eastern and Southern Africa (COMESA) COMESA was formed in 1994 to replace Preferential TradeArea (PTA) which existed since 1981. It comprises 20 members including Malawi, Angola, Burundi, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, Zimbabwe and Comoros. capita of US $ 933 SADC offers a big market opportunity for exporters and importers. To achieve the above objectives, SADC governments have agreed through the signing of the Trade Protocol to eliminate all forms of barriers COMESA has a population of approximately 340 million with a gross domestic product (GDP) of about US$170 billion and with a GDP per capita of US$ 690. The overall objective of COMESA is to create a common market in which goods and services move freely across boundaries of member states. C O M E S A M E M B E R S TAT E S D E M O K R AT I C REPUBLIC OF CONGO M A L AW I MAURITIUS ANGOLA S WA S I L A N D L E S OT H O TANZANIA NAMIBIA Dschibuti Kartum Addis Abeba FIGURE 6 20 Member States Header Total Exports from the region: US$ 21 bn p/a Total GDP of over US$ 388 billion Fact about the COMESA REGION Huge Mineral Wealth (oil, copper, phospahte, iron, uranium, nickel, cobalt) Population of over 385 Million Population of over 385 Million Kinshasa Luanda Kampala Kigali Bujumbura Nairobi Header Dar es Salaam • Copycopy copy Moroni • Copycopy copy Lilongwe Lusaka • Copycopy copy Harare • Copycopy copy • Copycopy copy Tananarive Windhoek• Copycopy copy Maputo • Copycopy copy Mbabane Maseru 90% of the land area is yet to be exploited Figure 5 showing COMESA Member States Header • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy 14 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • To this end COMESA plans to transform the Free Trade Area (FTA) to a Customs Union in 2004 (which entails the complete removal of tariff and non-tariff barriers to trade within the union), and the establishment of a Common External Tariff on goods imported from non-COMESA countries). This will be a further step in the attainment of economic growth. C OUNTRY R ATE OF CHAPTER 1: BUSINESS READINESS FOR EXPORTING Benefits of the COMESA Customs Union 1. Reduce the costs of cross-border trade through the simplification of customs formalities. 2. Increase trade negotiating strength of COMESA. As a Customs Union, member countries will be able to negotiate more effectively than individual countries. 3. With the opening up of the markets within the region, countries will be able to take advantage of the economies of scale. 4. The union will create an enabling environment for domestic cross border and foreign direct investment. Source: COMESA briefings No. 1 May 2002 D UTY A PPLIED ON COMESA O RIGINATING G OODS Djibouti Egypt Kenya Madagascar Malawi Mauritius Sudan Zambia Zimbabwe Duty free trade – No duties or charges of equivalent effect on all goods originating from these countries Cameroon Eritrea Rwanda Uganda 20% of the general (MFN) duty rates Burundi 40% of the general (MFN) duty rates Ethiopia 90% of the general (MFN) duty rates Angola Congo DR Seychelles Full MFN rates Namibia Swaziland Full MFN rates until the derogation lapses Table 1: COMESA Free Trade Area Rates of Duty 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING •••••• 1 2 3 4 5 6 7 8 9 10 11 • • • • • • • • • • • | 15 General System of Preferences (GSPs) GSPs are offers that developed countries have made to developing countries through the United Nations (UN) system. They are designed to allow preferential access to the market of the GSP-giving country to products from developing countries. In terms of the international trade laws that govern this (through the WTO), the GSP-giving country is not allowed to discriminate against any developing country that it already grants MFN status to. The GSP system is not reciprocal – the products of the GSP-giving country do not qualify for similar concessions in the GSP-receiving countries. While the GSP system is notified through the UN system, each country granting GSPs is free to determine which products it will offer GSP concessions on, and at what level of preference. The EU member states offer a common GSP list that applies to all EU member state markets. Due to the principle of non-discrimination, a developing country that wishes to include one of its export products on to the GSP list of a particular developed country it would usually have to convince a number of developing countries to back its proposal. Companies wishing to export to countries granting GSP concessions should check with the relevant authorities if their products are on the target country’s GSP list. African Growth and Opportunity Act (AGOA) The USA’s African Growth and Opportunity Act (AGOA) was signed into US law on 18 May 2000. This Act offered major concessions (which would last until 2008) to African countries that qualified. AGOA extended the range of products on the USA’s GSP list, but only African exports qualified for the additional products. AGOA also allows lesser-developed African countries to source their textile and clothing inputs from non-African and non-US sources as a special dispensation that will last until 30 September 2004. This concession was extended to Botswana and Namibia in August 2002, leaving Mauritius, Seychelles, and SA as the only SADC Members (apart from Zimbabwe) that do not qualify for this special concession. By the end of 2002 there were 38 African countries that qualified for AGOA concessions. Zimbabwe is the only SADC Member state that does not qualify for AGOA concessions due to its current political situation. In 2002 the USA imported US$ 18 billion worth of goods from Africa – just over 50% of this was imported under the provisions of AGOA (a 10% increase on the figure for 2001). In 2002 total apparel exports under AGOA only equaled 60% of the maximum allowed by volume (the ‘cap’). In 2003 the cap has been doubled. There is no duty or quota on apparel made in AGOA eligible African countries from US fabric, yarn and/or thread. Exporters intending to enter the US market should check with the relevant authorities if their products qualify under the provisions of AGOA. 16 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • CHAPTER 1: BUSINESS READINESS FOR EXPORTING World Trade Organization (WTO) All the five countries involved in the Intraregional Trade Promotion Program supported by InWEnt except South Africa are registered as developing country members of the WTO. South Africa has yet to declare its status (as a developed or developing country) to the WTO. The developing country member status meant that the four countries were not required to make any major market opening commitments under the Uruguay Round. However, various other effects of this Round will affect their economies. Companies involved in extra-continental international trade will be dramatically affected in most of their foreign markets. This is because in terms of the Uruguay Round Agreement all developed countries are required to reduce their MFN duty rate, and to remove various non-tariff barriers such as the MultiFibre Arrangements. This will have the effect of lowering the margins of preference that companies from these countries currently enjoy in their exports to the EU (under the Cotonou Agreement) and the USA (under AGOA). This process of tariff reductions, and increased competition, in the markets of the developed countries can be expected to continue once the negotiations under the current Doha Round of the WTO are concluded. Cross-border T rade Cross-border trade has been undertaken from time immemorial within neighboring countries. Some of the attributes to this type of trade include stringent customs regulations and porous boarders. Within COMESA states concerns were raised regarding the impact of liberalization through cross-border trade on government revenue and also continued viability of certain sectors of their economies. This led to a jointly sponsored program financed by the African Development Bank (ADB), European Union, The International Monetary Fund (IMF) and the World Bank commonly refered to as Cross Boarder Initiative (CBI). The key elements of the program are to facilitate cross boarder trade, investments and payments. The CBI program operates on the principle that allows smaller groupings within the framework of a regional integration scheme to give each other additional reciprocal concessions. This in effect advances liberalization and integration within smaller groups. Thus the main objectives of the CBI program are: 1. Elimination of tariffs on intra-regional trade 2. Adoption of harmonized external tariff 3. Harmonization of the limited list of items subject to non-tariff barrier for non-protective purposes 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING •••••• S UMMARY OF T RADE A GREEMENTS FOR M ALAWI , M OZAMBIQUE , S OUTH A FRICA , T ANZANIA AND Z AMBIA C OUNTRY 1 2 3 4 5 6 7 8 9 10 11 • • • • • • • • • • • | 17 Table 2 Duty free trade – No duties or charges of equivalent effect on all goods originating from these countries T RADE A GREEMENTS Malawi 1. COMESA; 2. The ACP-EU Cotonou Agreement; 3. The Malawi South Africa Bi-lateral Trade Agreement; 4. The Malawi Zimbabwe Bi-lateral Trade Agreement; 5. The SADC Protocol on Trade; 6. As a developing country it is entitled to utilize the various General System of Preference (GSP) schemes offered by developed countries; 7. The USA’s African Growth and Opportunity Act (AGOA); and 8. Malawi is a member of the World Trade Organization (WTO). Mozambique 1. The Mozambique SA Bi-lateral Trade Agreement; 2. The ACP-EU Cotonou Agreement; 3. The SADC Protocol on Trade; 4. As a developing country it is entitled to utilize the various General System of Preference (GSP) schemes offered by developed countries; 5. The USA’s African Growth and Opportunity Act (AGOA); and 6. Mozambique is a member of the World Trade Organization (WTO). Tanzania 1. The East African Community Treaty; 2. The ACP-EU Cotonou Agreement; 3. The SADC Protocol on Trade; 4. As a developing country it is entitled to utilize the various General System of Preference (GSP) schemes offered by developed countries; 5. The USA’s African Growth and Opportunity Act (AGOA); and Tanzania is a member of the World Trade Organization (WTO). South Africa 1. The Southern African Customs Union (SACU); 2. The South Africa EU Trade, Development and Co-operation Agreement (TDCA); 3. South Africa’s Bi-lateral Trade Agreements with Malawi, Mozambique and Zimbabwe; 4. The SADC Protocol on Trade; 5. It is entitled to utilize the various General System of Preference (GSP) schemes offered by developed countries; 6. The USA’s African Growth and Opportunity Act (AGOA); and South Africa is a member of the World Trade Organization (WTO) Zambia 1. COMESA; 2. The ACP-EU Cotonou Agreement; 3. The SADC Protocol on Trade; 4. As a developing country it is entitled to utilize the various General System of Preference (GSP) schemes offered by developed countries; 5. The USA’s African Growth and Opportunity Act (AGOA); and 6. Zambia is a member of the World Trade Organization (WTO) 18 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • CHAPTER 1: BUSINESS READINESS FOR EXPORTING Export Readiness Checklist This checklist of 59 questions gives an enterprise the opportunity to run a quick check on its export readiness by identifying possible gaps before entering a foreign market. Firms that are already exporting can discover some useful tips as well. The questions are organized in eight sections, each of which covers a particular aspect of export preparation. Each question is formulated to be answered with [yes] or [no]. By answering [yes] to a question, the firm confirms that It has clarified/secured this aspect of export. If an answer is [no] the firm has to obtain more information on that topic. Table 3: Export Readiness Checklist S ECTION 1: S TRATEGY NO. Q UESTION 1 Have you found out if your country has any bilateral or multilateral trade agreements that may make exporting your product(s) attractive to a particular area(s)? 2 Do you know if there are any incentives offered by or through your government for the manufacture or export of your product(s)? 3 Do you have a clear and written description of who your potential buyers are, or might be, specifying who they are, where they are, etc.? 4 Have you made inquiries about the possibility of adapting the features of your product, beyond what competitor’s are doing, to the needs and wants of your prospective buyers to enhance your bargaining position with them? 5 Have you made inquiries about whether you can meet the specific technical and non-technical requirements of your potential buyers concerning your product? 6 Are you ready to write a delivery strategy for your product that may enhance your bargaining position with prospective buyers? 7 Are you ready to write a strategy to build an image for your product and enterprise that may enhance your bargaining position with prospective buyers? 8 Are you ready to write a pricing strategy for your product that may enhance your bargaining position with prospective buyers? Y ES NO 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING •••••• 1 2 3 4 5 6 7 8 9 10 11 • • • • • • • • • • • | 19 S ECTION 2: M ARKETING NO. Q UESTION 1 Have you examined your potential market to see if there is a group of buyers out there whose needs and wants you can meet more adequately than your competitors? 2 Do you have the means to communicate with prospective international buyers through advertisement and promotion? 3 Do you have the means to communicate with prospective international buyers through participation in international trade events, dissemination of sales literature and personal sales? 4 Are your staff and procedures ready to carry out international sales and contract negotiations effectively? 5 Have you made preparations to locate, select and negotiate terms with sales agents effectively to gain strategic advantage? 6 Have you selected a particular Incoterm for making quotations? Y ES NO S ECTION 3: P RODUCTION NO. Q UESTION 1 Given its utilization rate and your volume of enterprise, is your present feasible production capacity sufficient to produce the quantities that will be required for future export orders? 2 Have you established a system that ensures the level and consistency of quality of the products to be exported? 3 Have you established a system to ensure the availability of sufficient quantities of inputs at proper quality at an affordable cost and on time? 4 Do you have a system in place to ensure timely production and delivery of ordered products? 5 Have you taken measures to ensure that your company’s average production costs per unit are considerably lower than the price that you can get for your products on the new export market considering the competing products and their price. 6 Do you have a system in place to reduce production costs, if necessary? Y ES NO 20 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • CHAPTER 1: BUSINESS READINESS FOR EXPORTING S ECTION 4: D ISTRIBUTION NO. Q UESTION 1 Have you studied packaging requirements for freight and made preparations for them? 2 Is your staff knowledgeable in handling export procedures and documentation? 3 Have you studied all alternative modes of freight for shipping your products and selected the optimum mode with respect to reliability and cost? 4 If and when your shipping costs are higher than that of your competitors, can you take measures to offset this disadvantage? 5 Have you made preparations for materials handling to cater for special storage requirements that may be needed for your product? Y ES NO S ECTION 5: F INANCE NO. Q UESTION 1 Have you made calculations to determine how much initial capital you may need to begin exporting and when it will be required? 2 If and when you need funding for initial capital investment from financial institutions, can you meet their criteria for creditworthiness? 3 Can corporate resources for foreign market development be freed without endangering your domestic market position or long-term prospects? 4 Have you made calculations of profitability under different conditions (e.g. terms of payment, order quantity, product specifications, export incentives, capacity utilization, etc.)? 5 Have you calculated the risk that exporting may expose your company to and taken precautions to insure against such risk? 6 Do you know how to use pre- as well as post-shipment financing? 7 Have you made preparations to evaluate overseas customer creditworthiness and ensure timely collection of payments from them? 8 Do you have everything in place to keep accurate records of your export transactions? Y ES NO 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING S ECTION 6: A NALYSIS NO. AND •••••• 1 2 3 4 5 6 7 8 9 10 11 • • • • • • • • • • • | 21 P LANNING Q UESTION 1 Does your written export plan clearly articulate and justify the selection of the target market you intend to serve? 2 Does your written export plan clearly articulate and justify how the export product will be positioned in terms of its features and attributes in the target market? 3 Have you decided which capabilities you must have to successfully implement your strategy? 4 Does your written export plan clearly articulate how you intend to communicate with the market? (Promotion and advertising) 5 Does your written export plan clearly articulate how you will secure sufficient quantities of inputs at proper quality at an affordable cost and on time? 6 Does your written export plan clearly articulate how you intend to build sufficient production capacity to produce and deliver the quantities for export orders? 7 Does your written export plan clearly articulate how you intend to ensure the timely production of export orders at optimal cost? 8 Does your written export plan clearly articulate how you will achieve the desired level of quality for the products to be exported consistently? 9 Does your written export plan clearly articulate how distribution channels (agents, wholesalers, retailers, etc.) will be selected and utilized? 10 Does your written export plan clearly articulate how you will install procedures to keep accurate records of your export transactions? 11 Does your written export plan include projections including pro-forma balance sheets and income sheets for the next 3-5 years? Y ES NO 22 | 1 2 3 4 5 A •••••• S ECTION 7: O RGANIZATION NO. 1 2 3 4 5 6 7 8 9 10 11 •••••••••• • AND CHAPTER 1: BUSINESS READINESS FOR EXPORTING C OORDINATING Q UESTION 1 Have you appointed someone to prompt sales inquiries, respond to them and close sales with a clear description of authority/responsibility and schedule? 2 Have you appointed someone for maintaining an adequate level of working capital for export production and operations with a clear description of authority /responsibility and schedule? 3 Have you appointed someone to arrange for the production and delivery of export orders with a clear description of authority/responsibility and schedule? 4 Do you have or can you acquire the necessary staff knowledge and skills for prompting sales inquiries, responding to them and closing sales through training or recruitment? 5 Do you have or can you acquire the necessary staff knowledge and skills for maintaining an adequate level of working capital through training or recruitment? 6 Do you have or can you acquire the necessary staff knowledge and skills for the production and delivery of export orders through training or recruitment? 7 Do you have or can you acquire the resources (money, time, etc.) for prompting sales inquiries, responding to them and closing sales? 8 Do you have or can you acquire the resources (money, time, etc.) for maintaining an adequate level of working capital? 9 Do you have or can you acquire the resources (money, time, etc.) for the production and delivery of export orders? Y ES NO 1 2 3 4 5 A CHAPTER 1: BUSINESS READINESS FOR EXPORTING S ECTION 8: M ONITORING NO. AND •••••• 1 2 3 4 5 6 7 8 9 10 11 • • • • • • • • • • • | 23 I MPROVEMENT Q UESTION 1 Have you developed procedures to monitor the completion of tasks related to prompting sales inquiries, responding to them and closing sales? 2 Have you developed procedures to monitor the completion of tasks related to maintaining an adequate level of working capital for export production and operations? 3 Have you developed procedures to monitor the completion of tasks related to the production and delivery of export orders? 4 Have you built a system, which will give you information about whether the tasks related to prompting sales inquiries, responding to them and closing sales, have been successfully performed and how they can be improved? 5 Have you built a system, which will give you information about whether the tasks related to maintaining an adequate level of working capital for export production and operations, have been successfully performed and how they can be improved? 6 Have you built a system which will give you information about whether the tasks related to production and delivery of export orders, have been successfully performed and how they can be improved? Y ES NO CHAPTER 1 2 3 4 5 A 24• •| • • • • PART 1 3 4 5 6 ••••• 2.1 International Marketing / Export Trade … … … … 2.2 Barriers to Export Trade … … … … … … … … … 2.3 Export Market Research … … … … … … … … … 2.4 A Step-by-Step Approach to Market Research … 2.5 Developing an Export Market Plan … … … … … 2.6 Export Trade Promotion Tools … … … … … … … 2.6.1 Trade Fair Participation … … … … … … … … … 2.6.2 Buyers-Sellers Meeting … … … … … … … … … 2.6.3 Trade Missions … … … … … … … … … … … … 2.6.4 Trade Partnership … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 26 27 28 30 31 33 33 35 35 35 | 25 Chapter Two EXPORT MARKETING 26 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 •••••• CHAPTER 2: EXPORT MARKETING International Marketing / Export Trade International marketing is based on marketing in general but the major difference is that your product or service will have to cross political and national borders. This in effect has implications for the marketing of your product. An exporter will need to know inter-alia, potential demand for the product/service in the foreign country, competition from domestic and imported products, national regulations (home country and export market) , distribution channels, political climate, financing, currency exchange risk and legal aspects. Specific issues relating to an export market will include: (i) Existing export barriers of the own country or import barriers of the target country (ii) Export financing (iii) Population to ascertain size of the market (iv) Income distribution and disposable income (v) Economic situation including foreign currency position (vi) Philosophy and religion (vii) Consumer characteristics e.g. literacy rates, eating habits, language, culture, etc. (viii) Communication including transport networks (ix) Environmental situation and security measures (x) Credit rating (xi) Trade policy 1 2 3 4 5 A CHAPTER 2: EXPORT MARKETING •••••• 1 2 3 4 5 6 •••••• Barriers to Export Trade One of the challenges that export trade poses are the various tariff and non-tariff barriers that an exporter is likely to meet in the course of doing business. Despite the trade regulatory framework instituted by the World Trade Organization (WTO) and other multilateral agreements, regional and bilateral agreements international trade is not completely free. The following are some of the impediments to free flow of goods and services in export trade. Quality Control Some countries have placed stringent measures with regard to imports of food stuffs. For example Groundnuts will only be allowed into their markets if levels of afflotoxin content conform to stipulated standards; or: The packaging has to meet defined standards according to size, strength, used materials etc. Strict regulations are often applied also to safety aspects (e.g. electrical appliances) and environmental aspects of products to be exported. Documentation An exporter is normally required to complete a number of documents some of which may be rejected on presentation to customs authorities due to technical reasons. In some cases this has interfered with the free movement of goods resulting in delays and missing delivery dates. Rules of Origin This has at times been a bone of contention especially when the product is originating from developing countries. The 35% local content for products originating from COMESA/SADC countries for example cannot be achieved by some countries which depend on the importation of raw materials for the production of their export products. Customs Valuation Customs authorities have at times either knowingly or otherwise valued differently the same product/commodity to suit their needs. As a result there have been delays in the clearance of goods. Red Tapes These are administrative delays usually associated with the issuance of certain documents such as import permits and sheer inefficiency. | 27 28 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 •••••• CHAPTER 2: EXPORT MARKETING Export Market Research In order to systematically assess the market potential for your product you should carry out a detailed export market research in the target market. Export market research is the process of gathering and evaluating information in the foreign target market with the objective of identifying market opportunities and constraints. Some of the specific issues an export market research should cover include: • Demand, growth and price trends for the product (if the product already exists) • Consumer purchasing habits and cultural practices • The extent of the competition and who are the main competitors in a specific market or region • Market characteristics: what do they produce, how do they distribute, how do they communicate and what are their strategies? • The size of the market itself. How many inhabitants are there, how is their present income and future trends ? How is the economy doing and what about the investment climate? A company may research a market by using either primary or secondary data sources. Primary market research is when data are collected directly in the foreign market place through interviews, surveys and other direct contact with representatives and potential buyers or customers. The advantage of primary market research is that it is tailored to the company’s needs and provides specific answers to specific questions. The main disadvantages are that it is time-consuming, more complex and expensive. Secondary market research is when a company collects data from various ‘secondary’ sources, such as trade statistics for a country, trade magazines, the Internet, International Trade Centre (ITC), published business articles, etc. This method is also known as Desk Research. Obtaining information from secondary sources is less expensive and helps the company to weed out unpromising markets and therefore enables the company to focus its marketing efforts on few selected promising products and markets. The main disadvantage of secondary data sources is that the information may not be reliable because it may either be outdated, not specific to your business needs or distorted by incomplete data-gathering techniques. However, having decided to undertake an export market research two factors will have to be taken into consideration: – Whether to use desk or field research or both? – Where to source the information from? 1 2 3 4 5 A CHAPTER 2: EXPORT MARKETING •••••• Desk Research Information on the target market may be collected through desk research using secondary data. In this case, in-house business reports and reports of earlier research, the Internet, books and trade magazines etc. would be useful sources of information. In addition information may be augmented by contacting institutions such as Banks, Chambers of Commerce and Industry, Consulting Firms, Shipping and Forwarding Agents, Trade Promotion Organizations, Foreign Missions and other Foreign Trade Promotion Agencies, etc. (i) Is there a market for my product? (ii) Is there need for product adaptation? (iii) What about the design, colours, price of my product? (iv) Which distribution channels are used for my product? (v) Which advertising methods are used for my product? 1 2 3 4 5 6 •••••• Field Research (Primary Data) This entails visiting the country one wants to export to. It may be costly but if prepared well it can be very effective in collecting useful information. The field research may be undertaken after the results of the desk research have indicated the possibility to export to the target market. A field research may be carried out by a special survey team or through trade missions. It is also possible to bring samples along and get direct feedback on one’s product from importers, retailers, import agents, government departments and others. Trade fairs often provide an excellent opportunity for testing a new market in a short time and at reasonable cost. If both, desk and field research have been undertaken it is important to analyze the results and implement the findings accordingly. | 29 30 | 1 2 3 4 5 A •••••• 1 2 3 4 4 5 6 ••••••• CHAPTER 2: EXPORT MARKETING A Step-by-Step Approach to Market Research Your company may find the following approach useful. It involves screening potential markets, assessing the targeted markets and making conclusions and informed decisions. A. Screen Potential Markets Step 1. Obtain export statistics that indicate product exports to various countries. Published export statistics provide a reliable indicator of where exports from your country are currently being shipped. Such statistics also provide information on who are the major exporters of similar products worldwide. Step 2. Identify five to ten large and fast-growing markets for the firm’s product. Look at them over the past three to five years. Has market growth been consistent year to year? Did import growth occur even during periods of economic stagnation or recession? If not, did growth resume with economic recovery? Step 3. Identify some smaller but fast-emerging markets that may provide ground-floor opportunities. If the market is just beginning to open up, there may be fewer competitors than in established markets. Growth rates should be substantially higher in these countries to qualify as upcoming markets, given the lower starting point. Step 4. Target three to five of the most statistically promising markets for further assessment. Consult your export promotion agency for more information and guidance. B. Assess Targeted Markets Step 1. Examine trends for your company’s products as well as related products that could influence demand. Calculate overall consumption of the product and the amount accounted for by imports. Step 2. Ascertain the sources of competition, including the extent of domestic industry production and the major foreign countries the firm is competing against in each targeted market. Step 3. Analyze factors affecting marketing and use of the product in each market, such as end-user sectors, channels of distribution, cultural idiosyncrasies or business practices. Step 4. Identify and analyze any foreign barriers (tariff or no tariff) for the product being imported into the country you are targeting. Step 5. Identify any government incentives that promote exporting of your particular product by both your country as well as the country you intend to export to. C. Draw Conclusions After analyzing the data, you may conclude that your marketing resources would be applied more effectively to a few countries. In general, if the company is new to exporting, then efforts should be directed to fewer than five markets. Exporting to one or two countries will allow the company to focus its resources without jeopardizing its domestic sales efforts. The company’s internal resources should determine its level of effort. 1 2 3 4 5 A CHAPTER 2: EXPORT MARKETING •••••• 1 2 3 4 5 6 •••••• Developing an Export Plan Once you have decided to export your products, it is important to develop an export plan. The development process may start with the key management of the firm reaching a broad consensus on the company’s goals, objectives, capabilities, and constraints. It is critical that all aspects of an export plan should be agreed upon by the personnel who will be involved in the exporting process, as they will be responsible for executing the export plan. The export plan should be kept simple, especially at the beginning since important market data and planning elements may not yet be available. As more information is gathered, the export plan will become more detailed and complete. An export plan should be viewed and written as a management tool, not as a static document. Objectives in the plan should be compared with actual results to measure the success of different strategies. The plan should be a living document and be modified to make it more specific and as objective as possible as new information and experiences are gained. A more detailed plan is recommended for companies that intend to export directly. Companies choosing indirect export methods may require much simpler plans. A good export plan will address the following questions: 1. What products will be selected for export development? What product modifications, if any, must be made to adapt them for the export markets? 2. What quantities of the product will be sold locally and externally? 3. Where will the products be exported to (target markets)? 4. How will the product be transported to the target markets? 5. What documentation is required locally, in transit and in the export market? 6. What methods of payments will be mutually accepted? 7. What is the basic customer profile in the export market? What marketing and distribution channels would be more appropriate to successfully reach the targeted customers? 8. What special challenges pertain to each market (competition, cultural differences, import controls, tariff and non tariff barriers, etc.), and what strategy will be used to address them? 9. What will be the export prices (and how will they be determined)? 10. What specific operational steps must be taken and when? 11. What will be the time frame for implementing each element of the plan? 12. What personnel and company resources will be dedicated to exporting? 13. What will be the cost in time and money for each element? 14. How will results be evaluated and used to modify the plan¿ | 31 32 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6 •••••• CHAPTER 2: EXPORT MARKETING Sample Outline for an Export Plan An export plan should contain the following key sections: Part I - Export Policy Commitment Statement Part II - Situation/Background Analysis • Product or Service • Operations • Personnel and Export Organization • Resources of the Firm • Industry Structure, Competition, and Demand Part III - Marketing Component • Identifying, Evaluating, and Selecting Export Markets • Product Selection and Pricing • Distribution Channels / Methods • Terms and Conditions • Internal Organization and Procedures • Sales Goals: Profit and Loss Forecasts Part IV - Tactics: Action Steps • Primary Target Export Markets • Secondary Target Export Markets • Direct and Indirect Marketing Efforts Part V - Export Budget • Pro Forma Financial Statements Part VI - Implementation Schedule • Follow-up • Periodic Operational and Management Review (Measuring Results Against Plan) Annexes: Background Data on Target Export Market • Basic Market Statistics: Historical and Projected • Background Facts • Competitive Environment / Advantages Purpose of the Export Plan An export plan is basically a road map to the export target market. It normally serves different purposes, the key ones being: a) To come up with clear export goals and objectives. b) Assemble facts to determine strengths, weaknesses, threats and export opportunities. c) To create an action statement that takes into account all these issues. The statement includes specific objectives, time schedules for implementation and it marks milestones so that the degree of success can be measured and help motivate personnel. 1 2 3 4 5 A CHAPTER 2: EXPORT MARKETING •••••• Export Trade Promotion Tools There are a number of tools a business can employ to enter a new export market. The most commonly used are Trade Fairs, Buyer-Seller Meetings, Trade Missions and Trade Partnerships. Trade Fair Participation Participation in an international or regional trade fair is one of the most effective ways of penetrating an export market. Trade fairs are excellent instruments to learn about different markets, to find distribution channels for your products, to test customers’ reactions to your products, to assess the extent of competition and to seek joint venture partners. Trade fairs are becoming more and more popular on the African continent and they still are one of the most important marketing instruments (over all) used in Europe – the heartland of the trade fair business. Companies can participate as exhibitors or simply as visitors in such events. Both forms of participating have their advantages and disadvantages. It is suggested that in a first step the relevant trade fairs are visited, saving the immense efforts for participating as an exhibitor for the second time. These visits can be used for first contacts and a lot of market research (i.e. what kind of products are offered, what is the quality of the products offered, how does the competition work, what kind of companies are participating from other countries). Types of Trade Fairs There are two main types of trade fairs: General and specialized trade fairs. 1 2 3 4 5 6 •••••• i) General (universal) Trade Fair A general trade fair is usually a trade fair where all kinds of products and services are presented, from agricultural products and animals to machinery and consumer products like clothing, shoe and such up to all kinds of services. ii) Specialized Trade Fair Specialized trade fairs focus on a single industrial or trade sector or a limited selection of them. These could either be an agricultural sector fair, information technology (IT) fair, books’ fair, etc. In most cases specialized fairs only admit trade visitors but some will allow the general public to come along at some restricted times. If you decide to participate in an international trade fair as an exhibitor, there are a number of factors you may wish to consider to make sure you fully maximize the benefits of your participation. Some of these factors are: Set Objectives for your Participation in the Trade F air Understand why you want to attend the trade fair in the first place. You need to be very specific as to what you would like to achieve from the trade fair participation. Below are some reasons why an SME may want to attend a trade fair. Some reasons why an SME may want to attend a trade fair: • Assess the market, product and design trends • Meet potential distributors or agents for your products • Penetrate new markets • Consolidate and improve market share • Launch new products • Get feed back on your products from customers and • Seek joint venture partners | 33 34 | 1 2 3 4 5 A •••••• 1 2 3 4 5 6.1 •••••• Select the right Trade Fair Since there are different types of trade fairs it is necessary for you to select a trade fair that offers you the best chance of meeting your set objectives for participation. Will a general or specialized trade fair be suitable? Which of the regional or international trade fairs would be most appropriate for you? There are a number of internet websites that will give you information about trade fairs around the world. The export promotion agency in your country can also advise you on the trade fairs taking place in the Southern African region and around the world. (www.auma.de, www.jetro.go.jp) CHAPTER 2: EXPORT MARKETING Plan your Participation Participation in a trade fair – especially an international one - is quite costly and needs a lot of preparation. You need to prepare your products, prepare promotional materials, booking of space but also book your accommodation and flights long in advance. You also need to engage a clearing and forwarding agent to arrange for your products to be shipped to the exhibition venue. You also may engage a contractor to put up the exhibition for you for a fee. The following list provides some useful tips outlining some steps and activities that need to be accomplished in order to effectively prepare for a trade fair participation: 1. Define the goals of your trade fair participation and make sure they are in line with your promotional strategy as outlined in the general marketing plan of your company. 2. Choose the trade fair on the basis of your marketing objectives, target group and goals. 3. Check whether there is going to be a national participation of your country at that fair and whether there will be any financial support from the government or other business associations or externally financed trade promotion projects. 4. Develop a budget for the trade fair participation. 5. Make a work plan for the participation. (Who is doing what and when?) 6. Make sure you fill exhibitors’ application forms and send them in good time to the fair organizers. 7. Choose your exhibits and stand contractor. (Depending on whether you participate yourself or in a national presentation.) 8. Do your travel arrangements. When participating in large international fairs early hotel booking is highly advised so that you can find an affordable hotel near to the venue of the exhibition. 9. Inform yourself about visa and health certificate requirements and meet them in due time. 10. Prepare your advertising materials (information on products and company), press information, price lists, order sheets, business cards and meeting reports. 11. Try to contact as many potential customers as possible before the fair and inform them that you will be participating. Provide them with your contact details during the exhibition such as the hotel you are staying, telephone, e-mail, etc. 12. Organize your transport to and from the trade fair. 13. Be well informed on cultural and traditional issues of the country you are going to. 14. Prepare to hire additional personnel that you might need to help you at the stand. 15. Be at the fair at least two days before the fair opens up to ensure that your products are exhibited on the stand the way you want. 16. Use the fair and any free time you have for learning about the market, your competitors and other relevant marketing information you may wish to get. 1 2 3 4 5 A CHAPTER 2: EXPORT MARKETING •••••• 1 2 3 4 5 6.2,3,4 •••••• | 35 Buyers–Sellers Meeting Trade Partnership A buyers–sellers meeting is a structured gathering of sellers (exporters) and potential importers (buyers) from different countries (if exporting is a main objective of the meeting) who in a series of one-to-one consultations explore business opportunities. Sometimes the buyers-sellers meetings are organized by trade specialists. Buyers-sellers meetings may also be implemented on a national level, i.e. between buyers and sellers from one country. Market entry through a trade partnership for example means the appointment of a trade agent or importing company in the export market. The services are normally paid (usually by the exporter) in the form of a commission, which is a percentage of the (e.g. CIF) value of the goods imported. The selection of a trade partner may be done with the assistance of trade support institutions in the importing country. The selection process for a trade partner should take into account the following key elements: A buyers-sellers meeting is organized to stimulate trade between enterprises, it can focus on particular regions such as SADC or COMESA to enable companies to take advantage of trading opportunities and liberalized trade arrangements. 1. Partner should be well-established, reputable and trustworthy. 2. Partner company should be medium–sized, financially healthy and well managed. 3. Partner to have at least five years of experience in the sector. 4. Partner to have adequate office, storage facilities, a sales force of at least 10 people. Trade Missions A trade mission comprises a selected number of companies sometimes led by a trade promotion official to establish contact with potential buyers in the export market. It may also be complemented by mini exhibitions to enable the potential buyers or importers appreciate the products being offered for export. A trade mission often follows a comprehensive market study aimed at collecting vital market information which was not available by doing desk research. Depending on the outcome of the market research, the aims and objectives of the trade mission may be formulated. CHAPTER 1 2 3 4 5 A 36• •| • • • • 3.1 3.2 3.3 3.4 3.5 PART 1 3 4 5 6 ••••• Export Finance … … … … … … … … … Sources of Export Financing … … … … Terms of Payment for Export Orders … Exchange Rate Risk … … … … … … … Insurance … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 38 38 39 40 41 | 37 Chapter Three EXPORT FINANCING AND INSURANCE 38 | 1 2 3 4 5 A •••••• 1 2 3 4 5 ••••• CHAPTER 3: EXPORT FINANCING AND INSURANCE Export Finance Small and Medium Enterprises (SMEs) usually don’t get advance payment from customers on export sales. Unless they get pre-shipment financing, the strains on their working capital are often more than they can manage. Export business requires a good source of financing to make it sustainable. If you are doing business in your own country, terms of payment for your products and services are relatively better as you may get paid on delivery or within 30 days of supplying without going through the hassle of changing different currencies. However, in export business you will normally achieve better prices than on the local market. The modalities for getting your payment may in some cases be so complicated that it may take 60, 90 or 120 days before your buyer effects payment. It is therefore necessary for you to secure special export financing to ensure a good cashflow for your export business. Sources of Export Financing There is a number of export financing sources that you can explore depending on what is available in your country. Below the two main sources for export financing are described: Commercial Banks Your commercial banks can arrange special financing for your export orders. Sometimes they may require that the buyers pay directly to the bank and they remit payment to you after recovering their money. Investment and Development Banks In some countries there are specialized investment and/or development banks which will have specific products tailor-made to promote investments or specific export orders of your business. In most cases, if you are seeking special financing for your exports, the banks will require that you produce a business plan outlining your exportmarketing plan. The banks may also require collateral or some form of security for the money you are borrowing. You need to speak to your bank manager or your export promotion agency to find out what export financing facilities are available in your country. 1 2 3 4 5 A CHAPTER 3: EXPORT FINANCING AND INSURANCE •••••• 1 2 3 4 5 ••••• Terms of Payment for Export Orders There are four common ways through which you can negotiate payment from your foreign buyers: 1. Cash in Advance This would be the most preferred way for you to get payment for your export orders. Unfortunately few foreign buyers are willing to pay cash in advance, with the exception of custom orders. Most foreign buyers will prefer to pay after the goods have been received, unless they have established trust in you over a period of time. 2. Open Account Selling on “open account” is the norm. This is where goods are dispatched, an invoice is sent and the seller “trusts” that the buyer will pay for the goods once they are received. This is how most SMEs do business at home and it may seem safe, especially when dealing with major industrialized trading partners in developed countries. However, this is the riskiest method of selling on the export market because the importer may pretend that goods have not been received or they are in bad condition, damaged etc. in order to buy time. 3. Letter of Credit (L/C) Letters of Credit (L/C) are more secure after cash in advance and it is the safest bet for an exporter. To close an export deal a foreign buyer gets his own bank to essentially guarantee payment with a letter of credit. In turn the exporter can have his bank “confirm” the letter, which essentially guarantees that the exporter gets paid regardless of the actions of the foreign bank. Exporters need to be aware that not all L/Cs are alike and it is wise to have your bank or an experienced financial institution verify them. An exporter has to be aware that some L/Cs from countries that are experiencing political unrests may not be worth anything especially when the banking sector is negatively affected. An L/C can also be seen as expensive, cumbersome and time-consuming. For a SME with a growing export business the paperwork for L/Cs can also be a challenge. Letters of credit offer two further opportunities for exporters looking to generate cash from their orders as quickly as possible: a) Discounting of a term L/C Sometimes you need to extend terms to a buyer in order for them to buy your goods. If you have a letter of credit that will only be paid in 30, 60, 90, or 180 days after you have shipped the goods but need your money immediately your bank may be able to help. Once you have shipped the goods you will receive an Acceptance Advice that indicates you have the right to receive payment after the negotiated term. You simply take the Acceptance Advice to a bank and ask them for the best discount rate they can give. The bank will advance you the money you would have received at the end of the term of the L/C less a percentage the bank keeps as a fee. This fee is to offset the risk that the buyer or buyer’s bank won’t pay when the term is up and to account for the present value of the funds owed to you in the future (this is the “discount percentage.”) b) L/Cs available by deferred payment In some countries, the issuance of a term L/C means the applicant (the importer) would | 39 40 | 1 2 3 4 5 A •••••• 1 2 3 4 5 ••••• have to pay stamp duties to the local government on the physical drafts. In order to avoid these additional costs for your buyer (the importer), another type of L/C has been developed, namely an L/C available by deferred payment. You can get this type of L/C discounted by a bank in exactly the same way as a term L/C (see above). c) Documentary Collections (the managed account) A fourth payment option costing less than an L/C is a “Documentary Collection.” This includes a bill CHAPTER 3: EXPORT FINANCING AND INSURANCE of exchange — an unconditional request from the exporter for payment on demand or at a specified future time — as well as other documents transferring ownership. Banks act as intermediaries. An exporter instructs his or her bank to transfer ownership only upon full payment. If payment is not made, the document of title, usually the Bill of Loading, is held by the importer’s bank awaiting instructions. The main question in export financing is when and how to receive the money while sending out the goods. There are different ways of doing this. Exchange Rate Risk Since your foreign buyers will pay you in a different currency other than your own home currency (if agreed so) there are some foreign exchange risks that you should have in mind. Your earnings from an export deal can drastically reduce if by the time of payment your local currency has appreciated. On the other hand if your local currency depreciates you realize exchange gains on your export payment. Similar considerations have to be made with regard to raw materials and other inputs that have to be imported for the production of the goods that are being exported. However, as an exporter, you should always know about the situation of the exchange rate and factor in a certain exchange rate risk into the price structure. It is highly advisable to quote your prices in internationally recognized hard currencies like the United States Dollar (US$), the European Union Euro (€) or the South African Rand (ZAR) when exporting to South Africa. There has been notable evolution in exchange rates regimes in the Southern African Region. Countries have been moving away from fixed central bank controlled regimes to more market determined regimes. The advantage of adopting floating exchange rate regime is that it allows countries to adjust monetary policy without having to worry about exchange rate. Floating exchange rates however, can be very volatile particularly if not supported by the country’s ability to export but rather by unpredictable donor funds inflows. 1 2 3 4 5 A CHAPTER 3: EXPORT FINANCING AND INSURANCE •••••• 1 2 3 4 5 ••••• Insurance It is important to take insurance when exporting to guard against possible loss or damage of goods before the importer receives them. This will cushion you from possible business loss in case of any accident or unforeseeable circumstances. There are two main types of policies offered by the insurance providers: There are different types of insurance available: One-Off Risk Cover These can be for a period of time or for the duration of the voyage. This type of a cover is suitable for exporters who do not export regularly. Marine Cargo Insurance Marine Cargo Insurance is the technical term used for insurance for both imports and exports shipped beyond the international boundaries whether by sea, rail, road or air. Marine Cargo Insurance aids the international trade and is recognized by the bankers as collateral security to the importer / exporter in the case of a loss or damage. Therefore a marine policy is one of the important shipping documents that an exporter needs to have for presentation to a bank before raising any advance payment. Open Cover Here the insurer undertakes to provide automatic insurance cover for all shipments of imports or exports as the case may be subject to terms and conditions agreed upon. An open cover is only an agreement and is hence an unstamped document. Each dispatch/receipt or batch of such dispatches/receipts could be covered by a specific policy. This policy is subject to several conditions, one of which relates to the duty of the insured (exporter or importer) to declare all shipments without any omission, subject to a definite time limit. Talking to your insurance company or insurance broker is absolutely necessary when you are considering venturing into export business. Insurance brokers and companies will give you all the necessary information regarding marine cargo insurance. | 41 CHAPTER 1 2 3 4 5 A 42• •| • • • • PART 1 2 •• 4.1 Quality Systems … … … … … … … … … … … … … … … … … … … 44 4.2 Quality Readiness Checklist … … … … … … … … … … … … … … 47 | 43 Chapter Four QUALITY 1 2 3 4 5 A 44 | •••••• 1 2 •• CHAPTER 4: QUALITY F I G U R E 7: C U S TO M E R D E F I N I T I O N OF QUALITY Customer Definition of Quality Header • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy Design • Does it fit to current tests & standards? • Is it a modern design or old fashioned? • Is it made of Quality Materials? • Is the color of the product good? • Is it going to meet my needs and expectations? • What about cultural issues? Conformitiy • Are all products the same? Cusotmer Satisfaction • Does the product fully satisfy the needs of the customer? • What has been the reaction (feedback) of the customer to the product? Header • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy Performance of the Product • Does the product deliver what it promises? • Does it have all the functions needed to perform its intended task? • Do all the products from one production line have the same performance level and function? • How durable is the product? Header • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy • Copycopy copy 1 2 3 4 5 A CHAPTER 4: QUALITY •••••• 1 2 •• | 45 Quality Systems Quality has been universally recognized as one of the key strategic elements of product competitiveness in both domestic and international markets along with price and distribution. High quality is the pre-requisite for successful market access and for achieving continued customer satisfaction. An exporter has to understand that quality is best determined by the customer. Your products have to meet and if possible surpass the expectations of your customers. There are different quality systems that are accepted internationally. Quality systems are used to ensure that products or services being produced meet customer expectations and international standards. Below is a historic development of the quality systems: 1. Innovator Quality System The question of quality used to be solved by innovations. It was innovations and new inventions that brought an additional amount of quality to the production process and to the products. This system was used for a long time until production started in factories. 2. Foreman Quality System Quality was achieved by the control of the foreman. The workers did not control their quality anymore as they had done during the times of the innovator quality system but a foreman in the factory controlled their work and ensured a certain quality standard. 3. Statistical Quality System The statistical quality system evolved with machinery and mass production. The quality of products was now defined statistically. 4. Quality Management This refers to the ability of the management of a company to adhere to all aspects of quality. The quality of the management was included into the definition of quality. Was a company well managed and was it flexible? 5. Total Quality Managment (TQM) I s today a standard in quality thinking. It does not only include the statistical elements of quality or the management aspect but it also takes into account the needs of the customer, all aspects of marketing and the production process into the quality scheme. 6. Quality Assurance via ISO 9001 ISO 9001/2000 is an international quality assurance and certification system. The International Standards Organization (ISO) was founded in 1947 by the United Nations. Since then it has been working to develop and foster standardization systems all over the world. ISO formulates all procedures and work processes for each company, business and production process possible. For example if a company producing steel frames receives a shipload of steel, the handbook gives a whole set of procedures and steps that need to be taken in order to check the material if it conforms to laid down standards before it goes into production. All of these steps have to be followed with each 46 | 1 2 3 4 5 A •••••• 1 2 •• shipload and all of these quality checks have to be documented for future use in case of disputes. Every two years ISO controllers (inspectors) may visit a certified company to check if the company is following the work processes, guidelines and CHAPTER 4: QUALITY procedures set up for this kind of business and/ or production and whether the documentation is correct. ISO certification is internationally recognized and can be a powerful marketing tool in international business. However, implementa- Some of the regional and international Institutions for Standards are: ISO International Organization for Standardization ISO Central Secretariat: 1, rue de Varembé, Case postale 56 CH-1211 Geneva 20 Switzerland Tel +41 22 749 01 11 Fax +41 22 733 34 30 www.iso.org Malawi (MBS) Malawi Bureau of Standards P.O. Box 946 MW-Blantyre Tel +265 1 67 04 88 Fax +265 1 67 07 56 [email protected] Mozambique (INNOQ) Instituto Nacional de Normalização e Qualidade C.P. 2983 MZ-Maputo Tel +258 1 30 38 22 Fax +258 1 30 42 06 [email protected] South Africa (SABS) South African Bureau of Standards Private Bag X191 ZA-Pretoria 0001 Tel +27 12 428 79 11 Fax +27 12 344 15 68 [email protected] http://www.sabs.co.za/ Tanzania, United Republic of (TBS) Tanzania Bureau of Standards P.O. Box 9524 TZ-Dar es Salaam Tel +255 22 245 02 98 Fax +255 22 245 09 59 [email protected] http://www.tbs-tz.org Zambia (ZABS) Zambia Bureau of Standards P.O. Box 50259, ZA 15101, Ridgeway ZM-LUSAKA Tel +260 1 23 13 85 Fax +260 1 23 84 83 [email protected] (Source: www.iso.org) | 47 tion and its accreditation costs including testing costs are not easily affordable by most companies, particularly SMEs. An exporter should always check with local standards bodies, which from time to time produce standards that con- form to international quality requirements for a number of products and processes. Quality Readiness Checklist How well is your business geared to improve quality of its products and services? Rate your business on a scale of 1 to 5 (1 = poor; 5 = Excellent). How ready is your business to embark on a continuous quality improvement system? POOR A REA /I SSUE TO BE EVALUATED Flexibility to accept change Pride in the organization Team culture Hard work Attitude towards training/willingness to learn Recognizing quality as a major concern Table 4 : Quality Readiness Checklist 1 EXCELLENT 2 3 4 5 6 CHAPTER 1 2 3 4 5 A 48• •| • • • • 5.1 5.2 5.3 5.4 PART 1 2 3 4 •••• Forms of Transport … Distribution Channels Export Regulations … Incoterms 2000 … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … 50 50 52 53 | 49 Chapter Five TRANSPORT AND LOGISTICS 50 | 1 2 3 4 5 A •••••• 1 2 3 4 •••• CHAPTER 5: TRANSPORT AND LOGISTICS Forms of Transport An exporter who wishes to send goods has some degree of choice regarding the mode of transport by which goods are conveyed. The decision on the mode of transport will however largely be influenced by such factors as the nature of the product, time and convenience in the delivery of the shipment, and cost of transport. Principally, there are four main modes of transport commonly used in the region, namely; air, rail, road and sea. Air transport is expensive but faster than all the other forms of transport. It is generally used to ferry perishables and high value commodities such as horticultural products and diamonds respectively. Rail transport is one of the cheapest mode of transport and is generally used for bulky goods. An exporter may decide to use rail transport during shipment of such products as timber and cement. ties, machinery, vehicles and chemicals especially from overseas. Road transport is the most expensive mode of transport after air transport and is extensively used in inland transport. However, there are advantages in sending goods by road as compared with sending them by other modes of transport. Goods sent by road can be moved from door to door without any transshipment and this is usual with small consignments. There is also flexibility in terms of timing as lorries can be loaded and dispatched at any time and can travel even in remote parts of the country. Exporters may have to decide which mode of transport to use depending on the requirements of importer, market destination, the type of product, country of origin of the product being exported and shipment costs. Sea transport is heavily used in exports and imports of large shipments for all kinds of commodi- Distribution Channels Distribution is defined as the means or mechanism through which your goods eventually reach the buyer. Physical distribution refers to the actual transportation of the goods from your production factory or warehouse, via the intermediaries (distributors, agents, wholesalers) to the final or end users or the retailer’s shelf. As such physical distribution is the downstream element of the art of logistics which describes the flow of goods from its natural sources through the processing stage in your factory all the way up to the final consumer. Consulting professional freight agencies on what form of transportation you should consider when exporting your goods is critical. They will tell you the best and most appropriate way for your products to reach their final destination. Bear in mind that the cheapest means may not always be the best. For example if you were to export fresh fruits which are highly perishable, even though road or sea forms of transport may be cheaper, air transport is the most appropriate because of the nature of your product. In case you decide to use sea transport for fresh fruits you have to consider 1 2 3 4 5 A CHAPTER 5: TRANSPORT AND LOGISTICS •••••• the transportation time and harvest the fruits (e.g. bananas, mangos….) early enough so that they can mature during the transportation time. Choosing a Distribution Channel In most European countries and the United States of America the distributive system is highly developed, unlike in most countries in Africa. If you are using a trade partner, a distributor or agent, these can help you decide on the best channel to use. For you as an exporter the job of selecting the right channels may prove to be too involving unlike your trade partner, who knows the market better. Nevertheless, you must know enough about the local distribution system to justify or at least understand, your partner’s proposals. Options for Distributing your Products on the Export Market There are several options that an exporter may consider when exporting. Below are some options: (a) Direct Exporting This refers to the exporter selling directly to the importer. The advantages of direct exporting include more control over the export process, potentially higher profits and a closer relationship with the overseas buyer. However, these advantages do not come easily since the exporting company needs to devote more time, personnel and corporate resources than indirect exporting requires. (b) Exporting through Sales Representatives In developing countries, a sales representative is the equivalent of a manufacturer’s representative in your own country. The representative uses the company’s product literature and samples to present the product to potential buyers. A representative usually handles many complementary lines that do not conflict. The sales representative usually works on a commission basis, assumes no risk or responsibility and is under contract for a definite period of time (renewable by mutual agreement). 1 2 3 4 •••• (c) Exporting through Agents The term “agent” means a representative who normally has authority, perhaps even a power of attorney, to make commitments on behalf of the firm he or she represents. It is important that any contract states whether the representative or agent does or does not have legal authority to obligate the firm. (d) Exporting through Distributors The foreign distributor is a merchant who purchases goods from an exporter (often at a substantial discount) and resells it for a profit. The foreign distributor generally provides support and service for the product thus relieving the exporting company of these responsibilities. The distributor usually carries an inventory of products and a sufficient supply of spare parts. He or she also maintains adequate facilities for storage and personnel for normal servicing operations. (e) Foreign Retailers An exporter may also sell directly to foreign retailers, although in such transactions, products are generally limited to consumer lines. This method relies mainly on traveling sales representatives who directly contact foreign retailers although results might also be achieved by mailing catalogs, brochures or other product literature. For example a manufacturer of say biscuits may export directly to a supermarket in the importing country. (f) Direct Sales to End Users A business may sell its products or services directly to end users in foreign countries. These end user buyers can be foreign governments, institutions such as hospitals, prisons, research institutions, schools and business organizations or even individuals (pre-fabricated houses exported by Swedish companies to individuals in Germany). Such buyers can be identified at trade shows, the Internet, business catalogues, local and international business publications and trade missions (e.g. buyer-seller- meetings). | 51 52 | 1 2 3 4 5 A •••••• 1 2 3 4 •••• CHAPTER 5: TRANSPORT AND LOGISTICS Export Regulations They are sanctioned by governments to regulate exports for a number of reasons amongst which are i.a. health, environmental, safety, social and a large number of strategic objectives. Health In order to prevent negative impact on the health of the consumers as a result of contamination, genetic manipulation, treatment with hormones, etc. governments impose certain restrictions. Exporters may therefore need to obtain health certificate (phytosanitary certificate) before an export is effected. This control is done through the issuance of export permit by the exporting country and import permit by the importing country. This is usually applicable for the export of meat and other animal by products which are susceptible to disease infection that may pose a health risk in the importing country. Environmental Regulations Some importing countries would like to request an importer to produce documentary evidence that shows that the product was produced in conformity with environmental requirements. Strategic Values A government may sometimes wish to control the export of certain products due to their strategic values such as endangered species e.g. Mulanje cedar, diamonds and other rare products and items. Many countries introduced and still enforce import restrictions or barriers in order to protect certain sectors of their economy. The US tariffs on imported steel is a good example for protectionistic measures. However, such practices are presently difficult to introduce and maintain because they contradict the development and liberalization of global trade and are not in line with WTO regulations. Social Considerations Some countries (e.g. the EU) require the fulfillment of certain social standards, for example that the goods do not involve child labor. 1 2 3 4 5 A CHAPTER 5: TRANSPORT AND LOGISTICS •••••• 1 2 3 4 •••• | 53 Incoterms 2000 In the sales contract the seller (exporter) and the buyer agree on the conditions of sale: payment on the one hand, delivery on the other. These terms determine at what precise time or at what precise location the ownership of the goods is transferred from the seller to buyer, and when / how payment will be done. In international trade a universal set of rules on delivery has been developed over the years. This universal set of rules is called “Incoterms”. The universal Incoterms 2000 (the number 2000 refers to the year of the most recent version) are grouped in four categories. The first group (E) has only one trade term: EXW, formerly ‘Ex factory’. The second F-group indicates the obligation of the seller to hand over the goods to a carrier Free of risk and expense to the buyer. The third C-group includes terms that indicate the sellers obligation to bear certain costs after main carriage, which is a critical point in the contract: the obligation to bear risks and costs are changing from one party to the other. The fourth D-group include the terms that prescribe that the goods must have arrived at a specified destination, implying all costs that have been borne by the seller. EXW – Ex Works (… named place) “Ex Works” means that the seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. This term thus represents the minimum obligation for the seller, and the buyer has to bear all costs and risks involved in taking the goods from the seller’s premises. However, if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale. This term should not be used when the buyer cannot carry out the export formalities directly or indirectly. In such circumstances, the FCA term should be used, provided the seller agrees that he will load at his cost and risk. I N C OT E R M S 2000 Group E Departure EXW EX Works Group F Main Carriage Unpaid FCA FAS FOB Free Carrier Free Alongside Ship Free on Board Group C Main Carriage paid CFR CIF CPT CIP Cost and Freight Cost, Insurance, Freigth Carriage paid to Carriage and Insurance paid to Group D Arrival DAF DES DEQ DDU DDP Delivered at Frontier Delivered Ex Ship Delivered EX Quay Delivered Duty Unpaid Delivered Duty piad (Note that when the Incoterms indicate a certain point or “….” the point of destination or origin must be mentioned) Table 5: Incoterms 2000 54 | 1 2 3 4 5 A •••••• 1 2 3 4 •••• FCA – Free Carrier “Free Carrier” means that the seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. It should be noted that the chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the seller’s pre mises, the seller is responsible for loading. If delivery occurs at any other place, the seller is not responsible for unloading. This term may be used irrespective of the mode of transport, including multimodal transport. “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, and inland waterway or by a combination of such modes. If the buyer nominates a person other than a carrier to receive the goods, the seller is deemed to have fulfilled his obligation to deliver the goods when they are delivered to that person. FAS – Free Alongside Ship (… named port of shipment) “Free Alongside Ship” means that the seller delivers when the goods are placed alongside the vessel at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment. The FAS term requires the seller to clear the goods for export. (This is a reversal from previous Incoterms versions, which required the buyer to arrange for export clearance). However, if the parties wish the buyer to clear the goods for export, this should be made clear CHAPTER 5: TRANSPORT AND LOGISTICS by adding explicit wording to this effect in the contract of sale. This term can be used only for sea or inland waterway transport. FOB – Free On Board (… named port of shipment) “Free on Board” means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss or of damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail the FCA term should be used. CFR – Cost and Freight (… named port of destination) ‘Cost and Freight” means that the seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods as well as any additional costs due to events occurring after the time of delivery are transferred from the seller to the buyer. The CFR term requires the seller to clear the goods for export. This term can be used only for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail the CPT term should be used. CIF – Cost, Insurance and Freight (… named port of destination) “Cost, Insurance and Freight” means that the seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the 1 2 3 4 5 A CHAPTER 5: TRANSPORT AND LOGISTICS •••••• named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage. Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover, he would either need to agree as much expressly with the seller or to make his own insurance arrangements. The CIF term requires the seller to clear the goods for export. This term can be used only for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail the CIP term should be used. CPT – Carriage Paid to (… named place of destination) “Carriage paid to …” means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any other costs occurring after the goods have been so delivered. “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea and inland waterway or by a combination of such transport modes. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. 1 2 3 4 •••• | 55 The CPT term requires the seller to clear the goods for export. This term may be used irrespective of the mode of transport including multimodal transport. CIP – Carriage and Insurance Paid to (… named place of destination) “Carriage and Insurance paid to …” means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any additional costs occurring after the goods have been so delivered. However, in CIP the seller also has to procure insurance against the buyer’s risk of loss of or damage to the goods during the carriage. Consequently the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIP term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover he would either need to agree with the seller or to make his own extra insurance arrangements? If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods have been delivered to the first carrier. The CIP term requires the seller to clear the goods for export. This term may be used irrespective of the mode of transport including multimodal transport. DAF – Delivered at Frontier” (… named place) “Delivered at Frontier” means that the seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport not unloaded, cleared for export, but not cleared for 56 | 1 2 3 4 5 A •••••• 1 2 3 4 •••• import at the named point and place at the frontier, but before the customs border of the adjoining country. The term “frontier” may be used for any frontier including that of the country of export. Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the point and place in the term. However, if the parties wish the seller to be responsible for the unloading of the goods from the arriving means of transport and to bear the risks and costs of unloading, this should be made clear by adding explicit wording to this effect in the contract of sale. This term may be used irrespective of the mode of transport when goods are to be delivered at a land frontier. When the delivery is to take place in the port of destination, on board a vessel or on the quay (wharf), the DES or DEQ terms should be used. DDP – Delivered Duty Paid (… named place of destination) “Delivered Duty Paid” means that the seller delivers the goods to the buyer, cleared for import and not unloaded from any arriving means of transport at the named place of destination. The seller has to bear all the costs and risks involved in bringing the goods thereto including, where applicable, any “duty” (which term includes the responsibility for and the risks of the carrying out of customs formalities and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination. Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation of the seller.This term should not be used if the seller is unable directly or indirectly to obtain the import license. CHAPTER 5: TRANSPORT AND LOGISTICS However, if the parties wish to exclude from the seller’s obligation some of the costs payable upon import of the goods (such as value-added tax: VAT), this should be made clear by adding explicit wording to this effect in the contract of sale. If the parties wish the buyer to bear all risks and costs of the import the DDU term should be used. This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used. DDU – Delivered Duty Unpaid (… named place of destination) “Delivered duty unpaid” means that the seller delivers the goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller has to bear the costs and risks involved in bringing the goods thereto, other than, where applicable, any “duty” (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes and other charges) for import in the country of destination. Such “duty” has to be borne by the buyer as well as any costs and risks caused by his failure to clear the goods for import in time. However, if the parties wish the seller to carry out customs formalities and bear the costs and risks resulting therefrom as well as some of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract on sale. This term may be used irrespective of the mode of transport but when delivery takes place in the port 1 2 3 4 5 A CHAPTER 5: TRANSPORT AND LOGISTICS •••••• of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used. DEQ – Delivered Ex Quay (… named port of destination) “Delivered Ex Quay” means that the seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port of destination. The seller has to bear costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay (wharf). The DEQ term requires the buyer to clear the goods for import and to pay for all formalities, duties, taxes and other charges upon import. (This is a reversal from previous Incoterms versions, which required the seller to arrange for import clearance.) If the parties wish to include in the seller’s obligations all or part of the costs payable upon import of the goods this should be made clear by adding explicit wording to this effect in the contract of sale. This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on discharging from a vessel onto the quay (wharf) in the port of destination. However, if the parties wish to include in the seller’s obligations the risks and costs of the handling of the goods from the quay to another place (warehouse, terminal, transport station, etc.) in or outside the port, the DDU or DDP terms should be used. DES – Delivered Ex Ship (… named port of destination) “Delivered Ex Ship” means that the seller delivers when the goods are placed at the disposal of the buyer on board the ship not cleared for import at the named port of destination. The seller has to 1 2 3 4 •••• bear all the costs and risks involved in bringing the goods to the named port of destination before discharging. If the parties wish the seller to bear the costs and risks of discharging the goods then the DEQ term should be used. This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on a vessel in the port of destination. | 57 CHAPTER 1 2 3 4 5 A 58• •| • • • • PART 1 2 3 ••• A.1 Institutions and Contact Persons for the Trade Africa Program 60 A.2 List of Relevant Websites for Exporters … … … … … … … … … 61 A.3 List of Publications Relevant for Exporters … … … … … … … … 63 | 59 ANNEXES 60 | ANNEX 1: INSTITUTIONS AND CONTACT PERSONS Institutions and Contact Persons InWEnt gGmbH/E 13 Weyerstrasse 79-83 50676 Cologne, Germany Lydia Jebauer-Nirschl Tel: +49 (221) 20 98 - 194 Fax: +49 (221) 20 98 - 116 E-mail: [email protected] Lucia Wienand Tel: +49 (221) 20 98 - 356 E-mail: [email protected] APPLICATIO Training & Management GmbH Heinrich-Barth-Strasse 1 20146 Hamburg, Germany Tel: +49 (40) 220 85 99 Fax: +49 (40) 220 86 46 E-mail: [email protected] Thorsten Trede E-mail: [email protected] DIALOG GmbH Agency for Development Corporation Rheinstrasse 2 65760 Eschborn, Germany Tel. +49 (6173) 61 723 Fax: +49(6173) 61734 E-mail: [email protected] Yousif Toma E-mail: [email protected] O.J. Krueck E-mail: [email protected] Export Board of Zambia (EBZ) Cinquième Etage, Woodgate House Cairo Road P.O. Box 30064 Lusaka, Zambia Tel: +260 (1) 228106 Fax: +260 (1) 222509 E-mail: [email protected] Mozambique Export Promotion Institute (IPEX) Avenida 25 de Setembro 1008 P.O. Box 4487 Maputo, Mozambique Tel: +258 (1) 307257 Fax: +258 (1) 307256 E-mail: [email protected] Malawi Export Promotion Council (MEPC) Victoria House Kanabar House 2nd Floor P.O. Box 1299 Blantyre, Malawi Tel: +265 (1) 620499 Fax: +265 (1) 635429 E-mail: [email protected] Board of External Trade (BET) Tanzania P.O. Box 5402 Dar es Salaam, Tanzania Tel: +255 (741) 328029 Fax: +255 (741) 268540 E-mail: [email protected] ANNEX 1: LIST OF RELEVANT WEBSITES FOR EXPORTERS | 61 List of Relevant Websites for Exporters www.ebz.co.zm Export Board of Zambia (EBZ) provides export information particularly on the performance of Zambia’s Non-Traditional Exports (NTE’s). www.eia.doe.gov Brief description of the numerous trade groupings of various types within Africa and the countries which are involved in the various trade blocs. www.commerce.uct.ac.za Policy outline on potential problems of SADC Free Trade Area (FTA) being implemented alongside a free trade agreement that already exists between member states of COMESA. www.kas.aog.za Review of the differences and common goals of SADC and COMESA as building blocs for African Economic Community to create a continent-wide economic community. www.nepru.org.na A NEPRU view point which looks at some of the main provisions, rationale and objectives of the Free Trade Area. It also looks at the current levels of the trade integration within SADC and the regional arrangements in Southern Africa. www.psfuganda.org USAID-PST Trade policy brief on regional trade arrangements including SADC, COMESA, EAC mainly focusing on the role of the private sector. www.ecdpm.org Report on the Economic Partnership Agreement (EPA) with the EU stating the compatibility of trade policies and assessment of the impact of the EPA on SADC and other scenarios. www.sardc.net Extracts of the Southern African News features on SADC’s launch of the Free Trade Area. www.tradescentre.org.zw The compatibility of trade polices in the context of current regional economic integration process: The case of SADC. 62 | ANNEX 2: LIST OF RELEVANT WEBSITES FOR EXPORTERS www.worldlink.co.uk An argument by Alec Erwin that the African Continent’s overlapping regional trade arrangements should be stitched together. www.ifat.org IFAT International Fair Trade Organization, the global network of Fair Trade Organizations gives a detailed look at IFATs works, membership procedures and how to source Fair trade goods. www.cbi.nl The exporter section of this website is useful for obtaining information about export development programs and training programs, access marketing guide lines and other resource on export readiness. www.comesa.int An overview of Common Market for Eastern and Southern Africa’s (COMESA) activities, trade and investment in the private sector, countries involved and transportation and publications on COMESA. www.tradeforum.org This website has vast information including current issues e.g. exporting better, recent themes on Developing countries, trade issues and other information on International Trade Centre. www.intracen.org International Trade Centre (ITC) supports developing and transition economies, particularly their business sector in their efforts to realize their full potential for developing exports and improving import operations. This website details these issues. www.wto.org The website provides information about World Trade Organization (WTO). The information includes its goals, tips to help producers of goods and services, exporters and importers conduct their business. It also views topics on trade, resources, documents and forums. www.itd.org The Trade and Development Centre was created to provide information to the community of internet users who have a specific need for information on trade as it relates to social and economic development. www.satradehub.org The Southern Africa Global Competitiveness Hub, sponsored by the United States government to promote the African Growth and Opportunity Act (AGOA). ANNEX 3: USEFUL PUBLICATIONS FOR EXPORTERS | 63 Useful Publications for Exporters Trade in Services: An answer book for small and medium-sized exporters. International Trade Centre. Trade Secrets Series. 2001 This guide is applicable to potential and existing exporters in a wide range of services sectors and addresses issues of intangible nature of services and offers practical and relevant advice to small and medium-sized enterprises to help them improve their export performance or enter new markets. The Malawi Products Handbook. Publication by Malawi Export Promotion Council 2003. The handbook provides detailed and up to date information on products manufactured in Malawi and their exporting companies as well as information useful when answering individual trade inquiries. Export News. Publication by Malawi Export Promotion Council 2003 A quarterly publication by Malawi Export Promotion Council (MEPC) focusing on what’s new in the exporting industry in Malawi. World directory of trade promotion organizations and other trade support institutions. Published by the International Trade Centre. The directory provides developing countries and economies in transition with a reference and useful addresses that will help establish contacts with and encourage a direct flow of information among organizations responsible for facilitating and promoting international trade. COMESA Traders Directory 1998. This directory of companies in the Common Market for Eastern and Southern Africa (COMESA) identifies support programs and activities which will facilitate the opening of neighboring markets within the sub-region. Exporting to the European Union. August 1999. Centre for the Promotion of Imports from developing countries (CBI) The publication contains information on how an exporter from a developing country can successfully enter the European Market. 64 | ANNEX 3: USEFUL PUBLICATIONS FOR EXPORTERS Your Show Master. A guide for selection, preparation and participation in European trade fairs, Centre for the Promotion of Imports from developing countries (CBI). COMESA in Brief, January 2003, COMESA Secretariat, Lusaka, Zambia. Africa Now, Market Access to the Fair Trade Markets. (a guide to market access), Africa Now, Harare, Zimbabwe. | 65 66 | NOTES | 67 68 | NOTES | 69 70 | NOTES | 71 72 |
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