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The Importance of Market Research
Some producers and manufacturers in Australia who
want to expand their boundaries into the global economy are at
times deterred by a lack of information on markets and by the
complex procedures and regulations associated with exports. If
some basic principles are applied to the exporting process, the
benefits to the exporter will be increased profits, sustained
and new employment opportunities and increased investment inAustralia.
Exporting is a cycle of three parts:
- Marketing
- Negotiation
- Procedures
Marketing is learning all about your prospective market before
you try to enter that market. It's essential to pick your
market carefully. Each market is different. Not only are there often
language and cultural differences, there are also differences-in
customs practices, duties and sales tax.
In investigating a market, learn who your competitors are and as
much as you can about them whether locals or other exporters. Find
out what price you will be able to achieve in a particular market
by investigating the prices of competitors as well as the costs
of customs duty and sales tax if applicable in that market. Many
new exporters start by taking part in trade visits to a market or
by taking part in trade shows inyour prospective market. Once you
have sourced and researched your market thoroughly the next step
is negotiating to secure a deal.
Trade terms determine who will pay for what in the transaction
and at what point the insurance risk changes from seller to buyer.
Trade terms, also known as incoterms, are regulations established
by the International Chamber of Commerce that governs the selling
and buying of goods in international trade. All member countries
of the ICC use these terms. In any dispute these terms are final.
Payment terms determine how you will be paid for the sale. It's
no use having an export order and not be paid on completion.
In general payments are prepayment, letter of credit, documentary
collection or open account. They range from the most secure to the
most vulnerable risk. Shipping terms determine how the goods will
move - either air or sea, containerised or non-containerised, chiller
or normal carriage, packing requirements, the necessary Australian
quarantine regulations for Australian food exports and the necessary
labelling and quarantine import regulations for the desired export
market.
Other areas that need to be taken into account include local cartage
costs and fees in Australia. Once the negotiation is acceptable
to both parties then an order will be placed by the buyer and accepted
by the seller. This placement of order and acceptance should be
in writing. The various parties to help in the negotiation are your
financial institutions, the Export Finance Corporation (which offers
credit insurance), marine insurance brokers, shipping companies,
forwarders and export management companies.
Export management companies and forwarders will help with information
and quotes about packing, overseas transport, local transport, port
authority regulations, handling charges, marine insurance and, if
needed, overseas requirements. The deal is now set to the benefit
of both parties. Now it's time for the procedures. When an order
is put in to the system, control of the order and ensuring the goods
are delivered as per the contract is the next step. Control is one
of the keys to export success.
Arrange the shipment by the method allowed in the negotiations.
Any changes to this will result in extra costs to the seller, as
you will not be able to pass these on to the buyer after acceptance
of the quote. However, if the buyer asks for the change then the
quote can be revised.
Documents are analysed into five sections:
- Commercial documents that include: the commercial invoice; the
packing list; the insurance declaration; and banking documents.
- Documents required by Australian authorities controlling exports
from Australia including the export clearance number.
- Transport documents that cover the movement of goods from your
premises to the overseas market.
- Documents required by the importing country that usually includes
the certificates of origin.
- Special documents pertaining to the type of product being exported
- food products usually require AQIS documentation.
Your documents must be suitable not only for payment purposes to
you but suitable for the customer to be able to clear goods through
their own customs authorities. You should keep your customer informed
throughout the whole process from receipt of the order through to
the final shipment point and distribution of documents. Just remember
you may have a great product but the service provided with the sale
of that product is just as important in an export market as the
supply of information and correct documentation. It's essential
to ensure that your buyer does not incur additional cost at their
end as the result of poorly prepared or late documentation at your
end.
Exporting does require a lot of research into understanding your
prospective market and learning about export procedures, but the
results are not only financially rewarding they can also enrich
your organization's operations.
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