Guide to Exporting - A Do-It-Yourself Kit for Developing Your Export Plan (New Zealand Trade &...

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GUIDE TO EXPORTING

Guide to Exporting

UPDATED OCTOBER 2007

GUIDE TO EXPORTIN

GGuide to Exporting

UPDATED OCTOBER 2007

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TO GROWPROSPEREXPORTING

HOWAND

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NEW ZEALAND TRADE AND ENTERPRISE ALL RIGHTS RESERVED OCTOBER 2007

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A DO-IT-YOURSELF KIT FOR DEVELOPING YOUR EXPORT PLAN

20439 Guide to Exporting WkBk FASec2:i Sec2:i20439 Guide to Exporting WkBk FASec2:i Sec2:i 31/10/07 2:54:19 PM31/10/07 2:54:19 PM

Guide to Exporting A do-it-yourself kit for developing your export plan

©New Zealand Trade and Enterprise October 2007

All rights reserved

The Crown owns the copyright of this work. Apart from any use permitted under the Copyright Act 1994, no part of this work may be reproduced without prior permission from New Zealand Trade and Enterprise. Requests and enquiries should be directed to the Chief Executive, New Zealand Trade and Enterprise, PO Box 2878, Wellington.

The information contained in this work has been published in good faith and is not an endorsement by New Zealand Trade and Enterprise. If expert assistance is required, the services of a competent professional person should be sought.

Text revision: The Small Business Company Ltd,

Christchurch. www.tsbc.co.nz

ii

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Introduction 2

PART ONE Market Feasibility

Step 1 Identifying your target market 3

Step 2 Competitor analysis 8

Step 3 Can you make any money? 10

Step 4 Selecting a market entry model 14

PART TWO Prepare Your Business

Step 5 Building competitive advantage 18

Step 6 Manage the risk 22

Step 7 Make sure you have the fi nance 28

Step 8 Understanding compliance 31

Step 9 Capacity, capability and logistics 38

PART THREE Implement Your Strategy

Step 10 Build a promotion plan 43

Step 11 Pitching your business 47

Step 12 Following up 53

Business resources 56

Glossary 60

Self assessment test 62

Templates 63

CONTENTS

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Why export?Exporting can help your business grow and prosper. It can also improve your competitiveness by exposing you and your staff to ideas and new demands from overseas customers.

There is also the thrill of knowing that your business can compete against the best in the world – and succeed.

This guide aims to give you as much help as possible to develop an exporting revenue stream for your business.

Our defi nition of exports not only includes products but also a range of services. The common link between these forms of exporting is that they all involve foreign exchange payment from offshore sources.

Successful exportingThe main keys to successful exporting are commitment and planning. Management commitment, effort and attitude are crucial to exporting and building effective relationships. Planning is an essential step before you start exporting.

Successful exporting is about covering real costs, obtaining a return and getting paid. Exporting that is not profi table in the long-term wastes resources and can result in company failure.

Whatever your product or service, as a potential or existing exporter you must understand key issues such as: clients and their needs, rules or regulations, pricing, costs, service levels, competition, and cultural factors.

Am I ready to export? The Exporter Information section of the MarketNewZealand.com website includes a helpful ‘Self Assessment Guide’ prepared by New Zealand Trade and Enterprise. The test can be downloaded from www.marketnewzealand.com/fi rststeps or see the copy at the back of this guide.

Before considering whether or not to export it is important to develop a business plan, which will help you clearly identify where you are now, where you are going and how you plan to get there. If you do not have a business plan see Planning for Success, a do-it-yourself kit for developing your own business plan. Request a copy by phoning NZTE 0800 555 888.

INTRODUCTION

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STEP 1: IDENTIFYING YOUR TARGET MARKET

Choosing the best export target(s) for your business is critical because ‘getting it wrong’ can waste time, energy and money. This section provides ideas and information to help you understand the opportunities better and identify the best targets and marketplace.

A target can either be a specifi c customer (eg. a large company or corporation) or a specifi c market (eg. United Kingdom or Japan). If the customer is big enough they become a market on their own. In both cases you need to defi ne your targets in as much detail as possible – the more detail, the easier it is to target them.

It is important to understand your product or service, your sector and your market. You will need to gather information on:

• your chosen country and market

• the competition

• market entry models

• relevant regulations and entry requirements in your market

• product liability in your market

• freight considerations

• required export documentation

• obtaining fi nance for export

• how to get paid for your exported products or services

• any risk considerations.

Which market and why? 1A

You may have an export target in mind, but how easy will it be to enter into that market? Start by looking for market opportunities for your product or service where entry to the market will be less diffi cult and list some possible targets. Remember that you may hold a strong competitive advantage in the New Zealand market, but will this still be true when you take your product overseas? Look for markets where your advantage can be sustained.

Researching export markets 1B

There are many ways to fi nd information about potential markets. The two main ways are:

1. Secondary research (desk research). You can make a solid start from resources available within New Zealand.

2. Primary research. Some market information will only be available in the market itself, so you may need to visit the market or employ others to fi nd the information for you.

Information about export markets is widely available from New Zealand, including:

• demographics

• basic economic activity

• political situation and general market conditions

• exports to the market

• transport and communications

• political involvement or exchange with New Zealand.

EASY TARGETS FIRST

Choosing low-risk targets fi rst will allow you to check and develop the export potential of your products.

IDENTIFY TARGET MARKETS

Include smaller countries too because often they are buying centres for other markets (for example Macau for China). The smaller countries may also be easier to trade with as major exporters concentrate on larger more complex markets.

DON’T TACKLE TOO MANY MARKETS

Beware of diluting your focus and resources by tackling too many markets at once (unless you’re selling worldwide through the internet). Most exporters aim to achieve success in one overseas market at a time before expanding their horizons.

MARKET FEASIBILITYSTEP 1: IDENTIFYING YOUR TARGET MARKET

SEE TEMPLATE 1A (Gathering market information)

SEE TEMPLATE 1B (Researching a market in depth)


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Here are some tips to get you started on your desk research:

New Zealand Government sitesNew Zealand Trade and Enterprise (NZTE)Add NZTE’s MarketNewZealand website (www.marketnewzealand.com) to your favourites because you are likely to use its resources frequently. The Country Brief series provides snapshots of New Zealand’s top export markets. They include a country overview, sector opportunities, market entry and regulatory issues. These briefs are available at www.marketnewzealand.com/countrybriefs

Ministry of Foreign Affairs and Trade (MFAT)www.mfat.govt.nzClick on Country and territory relations (on the Home page) for information on the countries which New Zealand has bilateral relations. These provide trade information and an overview of the country, including the political and economic situation. You can also select Trade and information relations from the top menu to access downloadable information on trade agreements.

Other internet researchAn increasing number of overseas government agencies use the internet as their main vehicle for publishing information on compliance requirements, current events, general market information and trends on specifi c products.

Where possible, use information from offi cial government sources or well recognised international organisations such as the OECD, World Bank and United Nations. Here is a small sample of useful sources:

CIA World Fact Bookwww.cia.gov/cia/publications/factbook/index.html The World Fact Book is an annual publication, which provides an overview of virtually every country and territory around the world, and covers topics such as geography, population, government, economy, communications and transport.

Federation of International Trade Associations (FITA)www.fi ta.org FITA produces country profi les that include links to market research and other information.

Organisation for Economic Co-operation and Development (OECD)www.oecd.org The OECD provides comprehensive information on the 30 member countries, plus a range of information on non-member countries (including China and India).

Search enginesIf you are targeting a specifi c market, then it is wise to use the search engine page specifi cally for that market rather than a generic one. For example, use www.google.com.au for the Australian market, or www.yahoo.co.uk for the United Kingdom market. This will ensure more relevant search results, for example with government information sites.

EXPORTER EDUCATION PROGRAMME (EEP)

Partially subsidised by NZTE, the Export Education Programme offers a range of workshops delivered by export specialists.

Topics include:

• planning for export success – including strategic market selection and market research.

• market entry strategies

• effective market research

Participants are entitled to one-on-one coaching for up to 1.5 hours with the topic presenter, to discuss individual queries or issues.

See www.exported.co.nz for a workshop near you.


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Online business directoriesOnline business directories for your target markets can be useful for identifying possible customers (if you sell to other businesses) and competitors. Here is a sample of directories for some of New Zealand’s top export markets:

United States

Yellow Book USA www.yellowbook.com Yellow Book USA is the fi fth largest publisher of yellow pages in the United States and part of the Yell Group of international directories.

SuperPages www.yellowpages.superpages.comSearch by category, business name, city, and state. You can also do a nationwide search.

Switchboard Yellow Pages www.switchboard.com Search by business name or a limited range of categories.

United Kingdom

Yell.com www.yell.com A member of the Yell Group, an international directories business.

BusinessFinder www.businesslinx.co.uk A directory for small to medium sized businesses, including a detailed list of business categories.

Europe

Europages www.europages.net Allows searching by company name, product or service, or business sector, and you can narrow searches by country.

Middle East

AME Info Business Directory www.ameinfo.com/db/ Allows searching and browsing of database containing 299,593 companies, indexed according to the North American Classifi cation System.

Japan

Japan Telephone Directory http://english.itp.ne.jp/ This English version allows you to search by business name, region or category.

Worldwide

Kompass www.kompass.com A business directory listing more than two million companies in 70 countries.

Kellysearch www.kellysearch.com Search over two million companies worldwide for product, service and company information. You can also browse the directory by industry sector.

Search Engine Guide www.searchengineguide.com/pages/Business/ This site provides links to search engines, portals, and directories arranged by industry.

Alibaba www.alibaba.comA worldwide directory of suppliers.

Business and industry portals in other countries www.enterweb.org/research.htm A small business portal or directories arranged by industry.


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Additional research tipsYou can also:

• Talk to other exporters and attend export workshops run by NZTE, the nearest Chamber of Commerce, Export New Zealand or your industry association.

• Attend conferences, trade shows and trade missions where you may meet or make contact with successful exporters or visitors from countries you wish to target who can be useful sources of information or possible future customers.

• Talk to a few potential customers from the country you have in mind as an export target. For example, ask them, “What do we have to do, for you to deal with us?”

• Find out when targeted customers overseas are likely to buy. When is the end of their fi nancial year? When do they set budgets? When does their current supplier contract run out? (Remember that many larger companies or government agencies have long buying cycles, so the sooner you start the contact process the better).

• Research established exporters that you could joint venture with. For example, many larger companies overseas may have preferred suppliers. It could take you years to become a preferred supplier, or you could short-circuit the process through a joint venture with an existing preferred supplier.

Researching the potential challengesAn important part of assessing your target market(s) is to consider all the possible challenges to exporting. These include:

• import barriers

• import quotas and currency restrictions

• taxation

• health regulations

• CE marking for exports to Europe

• safety regulations

• environmental standards

• accreditation issues.

Further considerationsIt is important to be aware of country-specifi c constraints, including:

• tariffs or duties that make your product uncompetitive (check fi rst those countries that have a free trade agreement with New Zealand – it will be much easier)

• industry regulations such as banned food additives and packaging laws

• political instability such as a war or confl ict

• different business laws, i.e. import procedures, taxation, employment practices, currency dealings, property rights, and agency/distributorship arrangements. Obtaining advice from NZTE staff and respected legal practitioners in the countries concerned is imperative

• lack of intellectual property protection

• product to market logistics. Freight can be covered by insurance. You can also insure against product and professional liability, and product recall or tampering

• quarantine and regulatory requirements. Like New Zealand, some overseas countries have quarantine requirements and strict enforcement. Check with agencies such as the Ministry of Agriculture and Fisheries (www.maf.govt.nz) and the Ministry of Economic Development (www.med.govt.nz).

SAFETY REGULATIONS

All regulations applying to your product’s safety should be strictly followed. Failure to comply can prevent your product from being imported or if someone is injured may result in expensive penalty payments. For non-English-speaking countries, safety warnings may need to be translated and included with product packaging.


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Establishing your best target profi le 1C

Based on your initial research, the next step is to choose the most suitable target(s) from your short-list so you can do more specifi c research.

Which target and why?You need to be able to describe why a customer would purchase the product or service you offer. Focus on both the end user and your immediate customers. For example, if you sell to a distributor, you need to think about the advantages for them as well as their customers. What key competitive advantages does your product or service offer your customers?

Do not forget any cultural issues when entering a foreign market (even a familiar market like Australia or the United Kingdom can have crucial differences to the New Zealand market). Do you know the business and socio-cultural characteristics of your target markets? Your research should enable you to cross off those markets that have too many complexities and diffi culties, or are too risky for your business.

SEE TEMPLATE 1C (Ranking your target markets)


Understanding your key competitorsFew successful Kiwi exporters have succeeded without fi rst thoroughly researching and understanding the competition in their chosen overseas markets.

Competitor analysis is a critical part of your export strategy because you need to know exactly who you are up against. This will help you determine if you can realistically compete in any new market, so take the time to fi nd out as much as you can about your competition.

Building competitor profi les 2A

Use your research to build a profi le of your key competitors in the target market.

Try to discover information such as:

• the names and locations of local competitors

• any other international companies that export into this market

• their brands, product range or core competencies

• how they promote their products and services

• what price they sell at

• who their distributors and stockists are

• if they have any strategic partners or alliances you need to be aware of.

Be prepared to discover key competitors as you go, and remember if you are targeting large businesses in other countries they often have ‘preferred suppliers’ that may be very hard to dislodge (even if you have something better to offer).

Online directories Most countries have an equivalent to the Yellow Pages. Refer to the list of directories on page 5 to help you search for competitors in your selected market.

Visit the library Larger city libraries stock overseas business directories, magazines and journals. Researching entries or adverts in these publications can help you pinpoint competitors. Some libraries also offer extensive online global business directories and databases which you can access free of charge (some services may be limited to library members only).

Network with other businesses and exportersTalk to your business contacts, your bank, accountant and lawyer to see if they have any contacts you can talk to. Some of your suppliers (including marketing and PR companies) may have other clients already exporting that you could approach for information about markets and competitors.

Actively seek out opportunities to talk to other exporters because they can offer valuable insights into the level of competition in your target markets. Many of these exporters might belong to industry organisations, Chambers of Commerce, Business New Zealand or Export New Zealand. Consider talking to and joining all of these organisations.

Many associations can also supply valuable research specifi c to your industry, much of which is based on ‘hands-on’ information collected from their members over the years.

If you’re unsure which association would best suit you, visit www.business.govt.nz and browse through their comprehensive Industry Organisations directory.

GLOBAL MARKET INTELLIGENCE SERVICE

Register for NZTE’s Global Market Intelligence service (Click on News at www.marketnewzealand.com) for weekly alerts and news about overseas markets, exporter opportunities and overseas trade activities.

SAVE TIME

Research can be time-consuming. Most libraries offer specialised fee-based business research services, so it may be worth paying for a professional research librarian to track down the informationyou need.

SUBSCRIBE TO E-NEWSLETTERS

Subscribing to your competitors’ newsletters will help you gain invaluable insights into how they operate, their successes and most importantly, who their clients are.

Subscribe to newsletters on generic business websites as well to keep up to date with news and latest developments.

MARKET FEASIBILITY STEP 2: COMPETITOR ANALYSIS

SEE TEMPLATE 2A (Competitor assessment)8


STEP 2: COMPETITOR ANALYSIS

9

Methven LtdRick Fala CEO of Methven Ltd (a successful New Zealand tap and valve manufacturer exporting throughout Australasia, Europe, and the US) has found the export road a lonely one at times.

“When we looked for people to talk to there were very few who had travelled the same road. Using NZTE’s offshore staff was really important because they could introduce us to contacts in the market, take us to visit stores that might sell our products and offer us introductions to other New Zealand exporters, like Icebreaker, to share experiences.”

The company has been part of an informal design cluster with other leading New Zealand exporters for the past two years: “Talking to people is far more useful than reading reports about how to export,” says Rick Fala.

www.methven.biz

Attend conferences, events or trade shows Attending conferences, exhibitions and trade shows can also help with competitor research, especially if any overseas competitors will be there too. Visit their stands, listen, look at their material, take their free handouts and assess their competitive strength in their own country. This is a great way to investigate and benchmark the competition.

Pay a consultantIf you have the budget and lack the time to complete the research yourself, consider contracting an export business consultant to help you research competitors. You may also fi nd specialist export branding companies or global media and communications experts who have existing information on your competitors.

Make sure that you check their credentials and talk to some of their existing customers before you commit to spending money with them.

Visit competitors 2B and 2C

An exploratory trip also gives you the opportunity to examine the competition fi rst hand and fi nd out exactly who you are up against.

Good planning is essential to get the maximum benefi t for the amount of time, energy and money invested in your visit. Find out exactly where your competitors are located. It is important to plan as much as you can before you leave. NZTE may be able to provide guidance and advice on business hours, currency and entry requirements, and the best timing for your visit.

Summary It pays to do your homework. The more you know about the competition, the better placed you will be to:

• assess whether your goods and services will be viable in the chosen market

• develop your export strategy

• benchmark your products and services against the competition so you can position what you offer appropriately in the market

• understand and communicate your competitive advantage.

NETWORKING OPPORTUNITIES

NZTE also organises networking opportunities. These events offer a unique opportunity for you to meet businesses who already export and access a range of experts you may never otherwise get the chance to talk to. To fi nd out if there are any events scheduled in your area, contact your local NZTE offi ce or visit the Events section of www.marketnewzealand.com

FIND TRADE FAIRS AND EXHIBITIONS

Do an online search for relevant trade fairs and exhibitions or check the events schedule at www.marketnewzealand.com

CITY GUIDES

City guides are available at www.marketnewzealand.com. Select Market Information, click on Exploring NZ’s Export Markets and scroll down for City Guides.

The guides contain practical advice and contacts, including accommodation, transport, banking, food and entertainment, and cultural tips. They include maps locating NZTE offi ces in key cities.

You can also visit websites such aswww.earthcalendar.net for detailed country information, signifi cant dates and events.

SEE TEMPLATE 2B (Competitors to visit)

SEE TEMPLATE 2C (Competitors visit assessment)


The fi nancial analysis of your export opportunities needs to be undertaken early.

Any export opportunity needs to generate enough profi t to cover all your costs and reward you for the risk. Since New Zealand is a relatively small market your ultimate aim should be to generate higher sales and higher profi ts from your export markets than from your existing operation. Of course this will not happen immediately and you may have to take a longer-term view of your export plans.

Remember that:

• exporting will always cost more than you thought

• sales and revenue often take longer to generate than you planned

• customers may be slower to place orders than you hoped.

If you have a successful New Zealand business then the last thing you want is to discover that all your profi ts are being drained by your initial export steps. This chapter will help you evaluate more clearly what the fi nancial cost will be, what the potential is, and what fi nancial impact exporting will have on your overall business.

There are two ways to assess if you can make any money.

1. Complete a cash fl ow forecast

2. Calculate the break-even point

1. Complete a cash fl ow forecast 3A

The export component of your business should be self sustaining as soon as possible and the best way of ensuring this is through an accurate cash fl ow forecast.

You need to ensure that you have more money coming into your business than going out and make provisions for the daily fl ow of your money, plus identify the amount of initial capital needed to fund the export set-up costs.

A cash fl ow forecast will also help you determine any gaps in your planning. For example if most or all of your sales will be credit sales rather than cash sales then payment could be delayed one to two months – or even longer – after the sale, depending on how effi ciently you can chase up payment.

Prepare a sales forecastThis will always be the most diffi cult aspect of any export budget. It is important to resist the temptation to make top-down market predictions.

Your estimates should be carefully researched and very cautious. They should be based on your assessment of your competitors and their market share, the local customers and what they are likely to buy, and what marketing and promotion you are conducting to drive sales.

Pricing strategyA clear pricing strategy is crucial to successful and profi table exporting and will impact on your sales forecasting. If your pricing is constantly changing you will do little to build credibility and your buyers will become increasingly frustrated.

Again, research is critical to gain a thorough understanding of pricing in the market. Your pricing policy should take account of current competitor prices for your type of product or service so you can charge the price the market will bear. It may be hard to go above certain levels, which are often referred to as ‘price points’. Recognising a price point in your market may be your fi rst clue to your ability to enter the market.

Allow some fl exibility for variation in shipping and stocking costs, as well as in-market and after-sales servicing costs as your market grows. If you are also selling from a website, make

MARKET FEASIBILITYSTEP 3: CAN YOU MAKE ANY MONEY?

FINANCING YOUR EXPORT PLANS

Consider creating a cash reserve or fi nding funding or outside investors to make sure you have enough resource and can sustain your export plans until you succeed.

SEE TEMPLATE 3A (Export cash fl ow forecast)10

GET PROFESSIONAL HELP

Get your accountant and an export advisor to check all your fi nancial forecasts.

PRICING DECISION CHECKLIST

NZTE’s ‘Pricing decision checklist’ provides further advice on pricing. It is available at www.marketnewzealand.com/pricing


STEP 3: CAN YOU MAKE ANY MONEY?

11

sure you do not undercut your stockists or licensed suppliers in their markets.

Your price should refl ect your quality levels, delivery and promotion. It is not easy to increase prices in a market or under a particular contract once you have agreed to deliver at a certain price. The fi nal price should refl ect your manufacturing and any other costs at home, plus the estimated costs involved in delivering, promoting and supporting your activities in the market.

Calculating pricesPricing a product often means calculating two scenarios, based on both the New Zealand perspective and the target market perspective.

1 Allows you to calculate the costs of getting your product to market by entering your production and distribution costs. 3B

2 Starts at the retail price for similar products in the market and allows you to work backwards to estimate a possible price at each level. 3C

To use either or both costing senarios you will need a series of mark-ups or margins at different levels. You may not know these until you have researched the market and observed different prices.

Identify cash infl owsThe main sources of cash coming in from each months operations will be:

• cash from cash sales (received in the month you sell)

• cash from debtors who are paying for a past month’s credit sales (so the cash receipts will be staggered over the month or two following the sale)

• other sources of cash revenue such as interest or royalties.

Identify cash outfl owsEstimate all your costs, including all the monthly operating expenses in the export market, plus the set-up costs.

The main sources of cash going out will be:

• cash payments for stock purchases (note that if you buy on credit you will need to stagger the cash payments to the months that you pay the bills)

• all other cash expenses such as wages, rent, power, drawings, taxes paid, etc.

• set-up costs in the new export market

• travel and research costs

• protection of intellectual property

• advertising and marketing costs.

Initial set-up costsMuch like any business venture, it may be quite a long period of time before you see a return on your investment. Assuming you have already developed your product, you will also need to invest time in researching and preparing an export plan.

These initial costs can include:

• market promotion, trade shows

BEFORE NEGOTIATING YOUR PRICE

If you are involved in serious price negotiations, try to anticipate what you may be asked to do and allow for this in your price. Also consider the effects on your costs and returns of any discounts or charges that might be expected in some markets to get the business.

MARK-UPS AND MARGINS

We have used the term ‘mark-up’ in the cost sheets, but in some markets it may be called a ‘margin’. How these are calculated, as add-ons or percentages, will change, depending on the market and local ways of doing business. You need to fi nd out how they work in your target market.

SEE TEMPLATE 3B (Prices based on real costs)

SEE TEMPLATE 3C (Export pricing workbook)



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• overseas travel, market visits

• establishing branding and packaging

• establishing new plant and production capacity

• set-up costs of an overseas offi ce

• storage, premise leasing costs (New Zealand and offshore)

• employing additional salespeople, staff both locally and offshore

• freight and compliance costs

• product modifi cations

• intellectual property and other legal costs (such as compliance in the source country).

Product costsYou need to determine the actual landed cost of your product or service into the country in question.

You should have a good idea of your product costs within New Zealand, but there are additional costs you need to consider, such as:

• freight and shipping costs

• product insurance

• internal transport costs

• wholesaler or agent margins

• storage costs

• tariffs and other import taxes.

Freight and complianceWhile freight generally is a cost that you pass on to the end user in the product price, it is an ongoing cost that needs to be included in your cash fl ow projections. Depending on the shipping method you use, each shipment you make will likely have an up-front freight cost that will take some time (possibly months) to recover in sales. There could be many separate freight charges on a shipment. For example, pick-up from factory to port, port to port, port to warehouse, warehouse to destination. The simplest method is to have a freight forwarder handle the whole process.

Compliance will include providing the documentation on your products and shipments as required for customs export and the destination country requirements. In most cases fi ling export documents will incur charges. A freight forwarder will charge for their services in handling this documentation and pass on the costs they incur such as customs handling charges, insurance levies, tariffs or other taxes. Once again, consult a freight forwarder or customs broker for help in this area.

Refer to incoterms in glossary.

SummaryRemember cash is king in your business – without it your business will likely fail – even when the underlying profi tability is sound. It is therefore vital that you continually monitor your cash position via your cash fl ow budget. The sooner you can identify the diffi cult cash fl ow periods, the better because this allows you time to approach lenders for bridging fi nance or make other arrangements.

AVOID SHORTCUTS

Avoid any shortcuts in preparing cost forecasts as the survival of your business could be on the line.

CHECK COMPETITOR PRICES

It is not unusual for a product once landed to be uneconomic to sell as the landed costs make the product just too expensive related to local products. So check your research and competitor prices again once you have completed this exercise.



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2. Calculate the break-even point 3D

Once you have researched your selling price, identifi ed your costs and completed the cash fl ow forecast, you are in position to calculate your break-even point. This will help you assess whether the whole idea is feasible. It may also give you an indication of the minimum quantities you need to ship (or the hours you need to work) to make the effort worthwhile.

You can then compare the required break-even point (minimum quantities or minimum hours) with your research into the level of demand in the actual market. This calculation becomes especially important in working out the feasibility of exporting your product for two reasons:

1 Is the shipment profi table? Will you actually make enough money out of the shipment to make it worth your while? Are there any areas where you could trim costs or be more effi cient? Should you increase your prices?

2 Is it achievable? Your break-even calculation may reveal a higher number of sales are needed than you feel is achievable. For example, if the break-even was 2,000 units of your product and your research has shown that the market could absorb only 1,500 units then obviously the operation is not viable. On the other hand if the market could easily absorb 20,000 units then a break-even of 2,000 units starts to look much more promising.

BREAK-EVEN VS PROFIT

Remember that the break-even calculation estimates how much you must sell in order to make ZERO profi t and ZERO loss. Anything over and above your break-even point is your PROFIT.

SEE TEMPLATE 3D (Calculating export break-even point)


This chapter provides you with an overview of the main methods of entering an overseas market. Theoretically, all of these options will be open to any company with a marketable product or service.

In practice, your range of possibilities will be limited by the size of your company and its resource base, particularly cash resources. A number of other factors such as risk and commitment are closely related. There are pros and cons to each method so it is important to evaluate which method is going to best suit your situation. Different markets may also require different approaches so you may need to consider more than one entry strategy.

Agents and distributors 4A

The great majority (90 percent) of new exporters choose to work through agents and distributors, who take either a percentage (agent) or a margin (distributor).

An agent is employed by you to represent your company in the local market. They are generally paid through sales commissions. You retain the customers, and you are responsible for the costs incurred by your agent. They do not import your product or hold stock. While customer ownership is technically yours, many well-established agents have their own customer base, and some wholesalers may only buy through a certain agent.

A distributor buys product from you and on-sells to their customers, adding a margin or setting their own price. They will import and hold stock of your product and may provide after sales service for customers. Distributors will tend to concentrate on products which are the easiest to sell and/or have the highest margins, so if your distributor handles a large range of products, yours may not get much attention.

Choosing an agent or distributorTake time to select the right representative as changes can be diffi cult and costly. The most crucial factor is that you and your representative must be able to build a strong, positive relationship based on open two-way communication. You are looking for strong market representation and a reliable distribution system that can function at a distance.

Personal contact is essential so after establishing a list of possible agents you need to visit the market to meet them and assess market conditions. The prospective agent or distributor should have a good knowledge of the local market and be confi dent about your company, your product and your chances for success. You can also ask retailers and customers for recommendations of importers or distributors with good reputations for professional service and support.

It is important to ask agents what other product lines they represent. If these are too similar to your own there could be a confl ict of interest, and your products may suffer at the expense of competitive brands. It is best to select an expert with an established distribution channel selling to your target clients. Ask for references and research the business background, reputation and stability of the agent or distributor.

It is also wise to set a trial period for the agency or distributorship with agreed goals and outcomes at the outset that are clearly understood. Cover any necessary points such as targets, performance measures, territory and stock levels.

Direct sellingDepending on the type of product or service you are exporting, you may be able to consider selling directly to your target customer in market.

One option would be to try and sell directly to a large company or specialist retail stores. However the most common way of selling directly is via the internet.

This method is becoming easier as consumers feel more comfortable making purchases over the internet. The benefi t of this method is that it allows you to test the waters without major

MARKET FEASIBILITYSTEP 4: SELECTING A MARKET ENTRY MODEL

DISTRIBUTION AGREEMENTS

The NZTE checklist ‘Distribution agreements’ by international lawyer Robert Auerbach offers helpful advice and tips on dealing with distributors. Two other useful documents from this same source are ‘Am I an agent or a distributor?’ and ‘Confi dentiality agreements’. Visit www.marketnewzealand.com/auerbach to view and download all these guides.

14 SEE TEMPLATE 4A (Your distributor profi le)


STEP 4: SELECTING A MARKET ENTRY MODEL

15

investment. It also avoids third party mark-ups/costs and allows you to maintain direct control over your marketing. However before you decide on this method of market entry you need to ask yourself: 1. Are my customers online?2. Are my competitors online?3. Does my product lend itself to online sales?

Your target customer may not feel comfortable purchasing from a company without a local presence and it can be diffi cult to provide good customer service and after sales support from a distance. Your freight costs may also be high if you choose to use this approach.

Establishing an overseas offi ceEstablishing an offi ce overseas can offer both increased control and effi ciency. The offi ce acts as importer and distributor, and provides a convenient point of communication for overseas customers. It can be staffed by New Zealanders who know your product well, or you can appoint local staff who know the market well, possibly enabling them to promote your product more effectively.

However this is a very expensive method so is seldom the choice for new exporters. Setting up a dedicated sales or marketing offi ce in one market can cost several hundred thousand dollars per year or more. The costs can be even higher in markets such as the United States, Europe and Japan where business costs are higher.

Another option could be to set up a ‘virtual’ local offi ce. This virtual offi ce might be simply the use of a local phone number that is re-directed to New Zealand, or a secretarial service that takes local calls and then contacts you.

Alternatively, your local presence could be a representative or branch offi ce where you rent offi ce space and hire staff (this could be just one person).

Strategic allianceRefers to any form of collaboration between two fi rms including:• design contracts• technology transfer agreements• joint product development• purchasing or distribution agreements• marketing and promotional collaboration.

A strategic alliance is often a less formal arrangement. Alliances are usually formed with a written contract but they do not result in the creation of a separate organisation so each partner maintains its business independence.

Each business contributes a core strength, such as technology or market access so that the partners benefi t from working together.

Joint ventureA joint venture usually refers to a company which is jointly owned by two or more independent businesses. Joint ventures normally have a longer term focus and higher level of commitment (e.g. funds, time) and provide a management voice for both parties

Joint ventures are often used to get around a trade barrier that prevents your entry into a target market. Instead of trying to establish a wholly-owned manufacturing or assembly subsidiary in an overseas market, you may prefer a joint venture where the venture partner does the manufacturing in the market. A joint venture can achieve many of the advantages of a fully owned operation without the long lead time and at a fraction of the cost.

A joint venture need not be a separate legal entity or company. Other forms of joint ventures include an agreement to work together, which is formalised through a heads of agreement or a strategic cooperation agreement.

STRATEGIC ALLIANCES AND JOINT VENTURES GUIDE

A downloadable guide, ‘Strategic Alliances and Joint Ventures: a how to guide’ is available from the Exporter Information section of www.marketnewzealand.com (enter ‘Strategic Alliances’ in the Search panel). It provides information on the benefi ts and disadvantages of these business structures, outlines joint venture equity variations, and provides a step-by-step guide to setting up a joint venture.



16

A joint venture can be used to:• manufacture your product, or incorporate your product into a larger one, in a target market

or a market that offers free trade with other larger markets• provide the fi nance and distribution network needed to penetrate a new market• establish a marketing and distribution presence in a target market• add new technology and expertise to your product• gain access to a market, particularly where a country has strict rules requiring capital

injection into the venture.

Contract manufacture/manufacture under licenseContract manufacturing entails an overseas fi rm manufacturing all or part of your product under contract to your specifi cations. Your relationship with the manufacturer is essentially a customer/supplier one, except that the product or component is made to your own specifi cations, rather than being a standard item. In many cases you might supply a mould or detailed manufacturing instructions to meet your specifi cations. The sales and marketing of the fi nished product remains your responsibility, not the manufacturer’s.Manufacture under license (MUL) is similar to contract manufacturing. It includes both manufacturing and marketing rights in a defi ned territory, using your technology, know-how and IP.Both of these options can give you increased competitiveness through lower production and transportation costs and no need for offshore warehousing. You can gain access to competitive offshore production and manufacturing capability, and it can enable you to overcome signifi cant import restrictions. It also allows you to focus on your core competency, such as R&D or design, rather than production.

Licensing Licensing involves making your products or services available, through a contractual arrangement, for another company to produce or replicate. Licensing usually includes manufacturing and marketing rights, backed by intellectual property rights.Can cover:• inventions• software and technologies• manufacturing systems and processes• products and services• artistic and literary materials.

This avoids the capital costs of manufacturing yourself, but the downside is that you may have little control over who they sell to and end up with a much smaller slice of the profi t.

Les Mills InternationalMillions of people around the world are getting fi t using group exercise-to-music programmes created by a New Zealand company, Les Mills International. Nearly 10,000 fi tness clubs in 55 countries are now licensed to offer the programmes, with an estimated four million participants weekly. The programmes make exercise entertaining through a carefully honed mixture of music and choreography that Les Mills describes as ‘exertainment’. The founder of Les Mills International, Phillip Mills, says the company plans to have its products in 25,000 clubs world-wide by 2015.

Les Mills’ programmes offer a consistent, high-quality form of exercise and are updated with new music and choreography every three months. They are delivered to instructors trained and certifi ed in the Les Mills system and working in clubs licensed to offer the Les Mills programmes. The instructors receive CDs with licensed music, a demonstration class DVD and written choreography notes.



17

“The promise for participants is that if they do one of our classes they will always have a world-class experience because they are taking part in a class that was created by the top teachers in the world,” says Phillip Mills. “We back that up with what is, arguably, the leading training system for group fi tness teachers. We developed a system which not only trains them in the technical side, but also in motivational, physical and personal development and theatre training.” There is also a management system to support clubs that offer the Les Mills programmes covering areas such as the recruitment of instructors, studio design and marketing.

www.lesmills.com

Franchising Franchising involves licensing your whole business format. This method particularly suits fast food, retail and service fi rms. The franchisee agrees to strict operational rules and you receive a royalty payment based on percentage of sales. Franchising can be a good way to expand your business rapidly with someone else providing the capital.You will need well-documented business systems and training manuals for potential franchisees. Consistent product, service delivery, branding and marketing are all vital when you sell the concept and product. For more information about franchising, see the website of the Franchise Association of New Zealand, www.franchise.org.nz

RoyaltiesThis method of distribution can be attractive if you have developed a product or component but lack the capital, time or commitment to manufacture and market the product or component yourself.In effect you sell your intellectual property to someone else to manufacture on your behalf, or to incorporate into a product they are already manufacturing. You then receive an agreed amount, a royalty, every time they make a sale. This method is often used when a small component has been developed that can be used in other processes, such as a microchip for use in computers.

Tax implicationsThere will be different tax implications associated with each market entry model. The three main areas for tax issues are around income tax, transaction/consumption tax and dealing with foreign tax systems. Be sure to get professional advice during your planning process so you are clear what your possible tax obligations might be and how you may be able to reduce them through your method of operation and market entry strategy.

Summary 4B and 4C

With so many options to choose from, selecting the right market entry methods for your business can seem complicated. Remember, though, that the different methods of market entry covered so far are not mutually exclusive options. In practice, to achieve maximum fl exibility and advantage many exporters combine one or more methods. Finally, remember to choose your overseas business partners carefully – the right selection is critical. Select the wrong partner and you will lose market share and profi ts. You should identify and shortlist a number of suitable candidates, and evaluate them very carefully against key criteria, before making a fi nal decision.

Ideally, try to identify and select an offshore partner with an established customer base matching your product/service, with a strong distribution network (and sales team) in a specifi ed geographic location.

TAX ISSUES

To learn about the tax issues for exporting to the United States, United Kingdom or Australia, attend an Exporter Education country specifi c Tax Issues workshop. For more information, visit www.exported.co.nz or phone 0800 232 800.

SEE TEMPLATE 4B (Assessing entry models)

SEE TEMPLATE 4C (Market entry selection tool)


The most important step of all 5A

Once you have researched the strengths and weaknesses of your competitors, you need to clearly defi ne and then promote the competitive advantage of your product or service.

If you are to succeed internationally, this is possibly the most important step of all.

You may have a distinct competitive advantage in the New Zealand market, but fi nd it more diffi cult to achieve a compelling competitive advantage in an overseas market, where you may have to compete with both local suppliers and multi-national companies. All businesses need a clear point of difference to win and retain customers. Most export markets you enter are likely to have local businesses that can supply an alternative or something similar. So you must be good at what you do and demonstrate that your products or services are better than local options. You need to build a case for why any potential overseas customer should choose you over a local competitor.

Analyse your product or service 5B

Now consider what makes your product or service better than the competition. You need to identify why a potential overseas customer would choose your product over the local options.

Depending on your product or service, the answer could be a number of features such as quality, colour range, back-up service, a patent, or speed and availability. If you do not have a product that is better in some way than other options or has some advantage in the market, it is going to be very diffi cult to convince people to buy it.

WhereScape REDWhereScape RED is the only specialised software on the market in New Zealand or internationally for designing, building and operating data warehouses. The software allows its customers to build data warehouses 10 to 100 times faster than any other commercial option available today.

Since 2001, WhereScape has built a client base that includes: the world’s largest dairy exporter, Fonterra; the fourth-largest fi nance company in the United States, Wells Fargo Bank; major United Kingdom retail chain Allders, the Australasian operations of communications company Vodafone, and a host of other companies in New Zealand, United Kingdom, Europe and the United States.www.wherescape.co.nz

Complete a market SWOT analysis 5C

A SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) can help you gain an overview of your business and visualise more clearly where you and your competitors fi t in your selected market. Completing the analysis provides an important starting-point for you to fi ll in any knowledge gaps, overcome weaknesses in your company or acquire professional advice. It can also help you identify which type of competitive advantage you can explore and promote.

The questions in a SWOT checklist cover your:

• product or service

• production

• resource base

• available time and funding

• target market knowledge

• local market knowledge.

PREPARE YOUR BUSINESSSTEP 5: BUILDING COMPETITIVE ADVANTAGE

SEE TEMPLATE 5A (Your business advantage)

SEE TEMPLATE 5B (Your product advantage)

SEE TEMPLATE 5C (SWOT analysis)18


STEP 5: BUILDING COMPETITIVE ADVANTAGE

19

Gaining a clear understanding of your strengths, weaknesses and development plans will also enable you to respond clearly to questions from prospective clients, customers or those you need to infl uence in export markets. You are likely to be asked these questions as part of their assessment of your business and its capabilities.

Lower the risk 5D

Overseas customers will assess the risk of doing business with you or your company. It may be much easier and safer for potential customers to buy their familiar brands. To overcome this challenge, you need to lower their risk by ensuring you have an excellent product or service and you have local market credibility.

Risk in the eyes of a customer depends on lots of factors and can vary considerably. For example, if you were looking to export a new product overseas, then:

Your risk list might be: Steps you can take:Your company is too small Get testimonials; cite achievementsYou are unknown Sell to an internationally known New Zealand

company and trade off their brand recognition

You might not be able to supply enough product

Find reserve suppliers

They do not know you Spend time visiting them in their market

The key point here is that the more you can lower the potential risk a new export customer faces, the better your advantage in their eyes and the more chance of success.

Build credibility through testimonialsTestimonials increase the trust people have in your business. They improve your credibility and can be a competitive advantage. If you have reassuring testimonials from previous customers, people will see doing business with you as being less risky.

For example, if you run a New Zealand construction company that has completed some project work on the Eden Park upgrade for the Rugby World Cup, then this ‘testimonial’ of your work could make it easier for you to tender for work in London for the 2012 Olympics.

You can quote:

• the name of the construction group you are working for

• any international companies you work alongside

• the scope and nature of the upgrade and your role

• written testimonials from project managers from (preferably) internationally known companies.

Even better are testimonials from overseas businesses in the market you are operating in. Ideally these should highlight some of your identifi ed competitive advantages.

Analyse your brandAn effective brand can be the best competitive advantage of them all, because while competitors can copy your products, price and service, they cannot copy your brand. Consider the credibility of international brands such as Coke, Kodak, and Microsoft.

In a small business a brand is best described as your reputation. It means that customers recognise your business name and what it represents.

A brand can convey a range of images and thoughts, but brand development does not just happen. It needs to be carefully planned.

SEE TEMPLATE 5D (Minimising risks perceived by the customer)

PRODUCT TESTING

An established New Zealand market is not an absolute prerequisite for exporting. Some products are specifi cally designed for certain types of markets or much larger markets than New Zealand. However, testing the product at home can help your exporting efforts. As well as providing you with overseas market credibility, strong domestic markets often provide the necessary fi nancial base to get into overseas markets and sustain your company until exporting begins to generate profi table income.



20

If developing a brand think about the following:• Make a list of what you would like your business brand to convey to potential customers.

Have you checked if your brand translates effectively to your potential new market?

• Are there any gaps in your branding statements? Could the brand be wrong? Are the core values right?

• Confi rm that the cultural connotations of your brand will be acceptable in your target market.

• Decide how you will promote your brand and create a budget to do it.

• Allocate a time frame for people to get the idea that your business is best.

• Ensure you encompass existing elements of your brand eg. Logo, slogan, name and trademark.

Analyse your marketingStudy the fl yers, adverts, business cards, website or brochures you have developed for your export clients. Do they promote your competitive advantages? Is your brand prominent?

Marketing is not so much about describing your product as providing compelling reasons for buying it. Ensure you always mention your unique selling points in promotional material.

Positioning your business 5E

Positioning is important because the message you project to customers can impact on their decision to use your business rather than another. Positioning allows you to demonstrate or communicate your unique offer in the market place.

It is extremely diffi cult to change the perception people have of you so it is vital that you have a clear idea of where you want to be positioned before you start promoting your business.

Everyone tends to compare you to the competition, or to the alternative of not doing any business with you at all. You need to be aware that people always have other options.

To position correctly, you should:

1. select competitors to position against

2. select the criteria to be positioned on (for example, product, brand, price, style, support, etc.)

3. work out what you have to do to project a unique position in the market.

Use strategic alliancesOne of the most effective steps you can take to build your competitive advantage and increase your credibility is to create a strategic alliance with another company that already has credibility in the marketplace.

Many successful New Zealand exporters have succeeded through an alliance with a larger or better known company. These alliances can be:

• key customers

• main suppliers

• third party endorsements

• distributors.

Strategic alliances of various kinds are an often overlooked means of gaining access to foreign markets. They can give you an unbeatable competitive advantage as these case studies demonstrate.

SEE TEMPLATE 5E (Positioning your business)



21

Create barriers for competitorsIntellectual property (IP) often provides the leverage needed for companies to successfully stay ahead of the competition. Intellectual property can be one of the most valuable assets for your business. It can take the form of a unique design, formula, invention, process or system.

Consider ways to protect it so that it becomes a barrier to competitors.

You have three choices with intellectual property:

1. Protect it by fi ling appropriate legal documents in the target export market

2. Don’t protect anything and spend your time building contacts, distribution, market share and business relationships

3. Try to do both 1 and 2.

The choice often depends on what you are selling. Physical products that are packaged almost always require some form of protection (such as the brand name), where sometimes services need less protection.

Case studyYou may risk being shut out of a market if your New Zealand trade name is already taken. For example, a failure to trademark ‘kiwi’ early on means that the bird is no longer solely associated with New Zealand. Registration of the word ‘kiwi’ by a French winemaker for wine sold in Europe is one example of how the word has been taken up by others. Failure to protect the word ‘kiwifruit’, despite huge expenditure marketing the fruit itself, enabled other countries to also market their fruit as kiwifruit. In response the Zespri brand was created and protected in the mid-1990s.

NZTE has protected the fern mark used by government agencies for offi cial branding. Called the Brand New Zealand fern mark, it is owned by The New Zealand Way, a company jointly owned by Tourism New Zealand and NZTE.

Intellectual property protection is covered in more depth in the next chapter. However, a sensible step is to talk to your lawyer, patent attorney or intellectual property consultant about what is best for you.


Identifying risks 6A

Exporting can be a risky business. Therefore, it is important to identify the key risks and develop a clear risk management plan which will help eliminate, minimise or manage the risks associated with exporting.

You may need to consult experienced fi nancial, insurance and legal experts on risk elements in an export transaction. Keep the risk management analysis clear and simple, but ensure your staff understand its importance.

Ensure you have considered:

• political events (borders can close, attitudes can change)

• legal issues with foreign standards and regulations

• customs and quarantine clearance issues or unforeseen tariffs

• changes in foreign exchange rates that could affect the profi tability of export transactions

• possible loss or damage to your goods in transit

• possible need to increase capacity to handle extra demand

• danger of neglecting your New Zealand customers while you develop export markets

• fi nancial and personal cost of trading in other countries.

Manage the key risksThe four key risks when exporting are:

1. overseas business culture (local politics, legal issues, tax and the ‘way things are done’)

2. fi nancial

3. success

4. a competitor copying your intellectual property.

1. Dealing with the business cultureConsider the following ‘risks’ when assessing a particular market.

Political instability such as a war or confl ictThis could result in defaults on payments, delays or even loss of product. Civil disorder may affect the personal security of you and your staff.

As a safeguard, check the New Zealand Ministry of Foreign Affairs (MFAT) travel advisory website (www.safetravel.govt.nz) before you travel or enter into any export agreement. You can get up-to-date travel advice and warnings simply by typing the name of the country you are considering into the ‘Advisory by country’ search box.

Some larger countries may have volatile regions within them, but other parts of the country may be safer to trade in.

Different business laws Never assume that rules and regulations will be similar to New Zealand. For example, import procedures, taxation, employment practices, currency dealings, property rights, and agency/distributorship arrangements are all likely to be different.

Finding a respected legal practitioner in the country concerned can be important. Contact NZTE for advice, email [email protected] or phone 0800 555 888. Alternatively, your New Zealand lawyer may be able to recommend overseas legal support.

PREPARE YOUR BUSINESSSTEP 6: MANAGE THE RISK

SEE TEMPLATE 6A (Risk management plan)

KIWIS OVERSEAS

Before you travel, register on MFAT’s ‘Kiwis Overseas’ website (www.kiwisoverseas.govt.nz). This will help MFAT staff to contact you in an emergency, (e.g. natural disaster, civil disturbance, family emergency etc.) or to pass on any information or situation alerts.

22


STEP 6: MANAGE THE RISK

23

Cultural barriersWhat works, or is popular, in New Zealand may not necessarily work overseas. It is important to investigate the cultural habits of a target market to assess the acceptance of your product or service. For example, if you sell clothing, the colours, motifs and patterns on the garments all need to be checked for suitability in the market. Your trading or brand names may also need to be altered to avoid negative connotations or translations.

Visiting your target market remains the best way to see how business is done, but attending an NZTE Export Education Programme country-specifi c workshop is a good start to discovering the ‘ins and outs’ of different markets.

2. Minimising the fi nancial risksFinance is obviously fundamental when exporting: you want to be paid quickly and without complications. Here are some factors to cover.

Credit checksWhen you receive your fi rst export order it is important to conduct the same credit checks as you would with any new customer in New Zealand. Ask for credit references and follow these up. The minimal cost of an overseas phone call could save you a substantial amount of money should the credit references cast any doubt. Also ask for the names of any other New Zealand suppliers they purchase from.

Once you are satisfi ed with a customer’s creditworthiness, establish clear payment terms in advance of the deal.

To protect yourself against payment default, use payment methods that provide you with some security, for example, irrevocable letters of credit. Your bank will be able to provide advice on various payment options and their relative advantages, plus advice on the reputation of overseas banks that may be involved in the process.

Export credit guaranteesThe best way to eliminate the risk of not getting paid is to secure payment up front (for example, if you sell online, you probably require the customer to pay by credit card fi rst before you process the order). In reality, however, most business clients will be looking for at least 60-90 days credit terms.

Along with price, quality and expertise, being able to offer your customers credit has become an increasingly competitive factor in international trade. If you can offer attractive credit terms you may stand a better chance of securing the deal.

Private credit insurance companies can provide short-term trade credit insurance for many markets and credit-worthy clients worldwide. However, if you are exporting to riskier countries, or your buyer is seeking fi nance terms beyond 12 months, then consider contacting the New Zealand Export Credit Offi ce (ECO), visit www.nzeco.govt.nz

Damage or loss of goodsConsider marine insurance for loss or damage caused to goods during transport. Many marine insurers now provide insurance policies that cover multi-modal transport.

Do an internet search for ‘export insurance’ to fi nd a specialist broker, or alternatively, talk to your bank when discussing payment options and credit guarantees as they may be able to offer insurance or recommend a suitable company. Also talk to your freight forwarder.

Exchange ratesWhat risk will any fl uctuation in foreign exchange expose you to? Volatility in currency exchange rates can seriously erode your projected profi tability from an export order.

Consult your bank about the best way to manage currency risks. Options include managing the risk by borrowing and selling in the same foreign currency, maintaining foreign-currency

COUNTRY AND ECONOMY PROFILES

NZTE’s ‘Country and economy profi les’ provide a useful introduction to key export markets. The briefs cover a range of issues you need to consider when preparing to export into a new market, including market entry advice, regulatory issues, business and cultural tips, and freight considerations.

These profi les are available at www.marketnewzealand.com. Enter the New Zealand Exporters’ page, select Helpful tips from the right-hand menu, and then click on Country Selection.

COUNTRY SPECIFIC FINANCIAL RISKS

Many export risks will be country specifi c. For example, exporting to Australia, Singapore or Hong Kong on letter of credit or secured terms is comparatively low risk if you fulfi l the agreed terms and your buyer is reputable. On the other hand, open account (no payment guarantee) deals in the USA can be high risk and you have limited recourse to recover debts.

PREDICTING CURRENCY TRENDS

Although it is useful to be aware of both short and medium-term trends in the New Zealand dollar exchange rates, be very careful about trying to predict currency trends. Many companies have lost money by misjudging currency trends.



24

accounts, or by offsetting component import costs with export receipts in the same foreign currency and with forward contracts. An international currency calculator such as www.oanda.com can help you calculate the potential losses from a fl uctuating currency.

Pricing incorrectlyPricing your product or service correctly is critical. Check the ‘price points’ for similar products in your intended market. If you are in a price conscious market, it can be tempting to price low to get your fi rst export order. Be very careful: extra unforeseen costs can take all the profi t out of the deal or even result in you making a loss.

3. Dealing with success 6B

As strange as this may seem, success can be one of the bigger risks in exporting.

To succeed as an exporter you must be fully committed to your export strategy. Record your thoughts on how you will deal with success. Consider what export success would be for your business, in terms of customers and sales levels. Also consider what you may need to do in your business to sustain this activity (trips overseas, employees, reinvestment in your business).

Unsolicited enquiriesSuccess can generate unsolicited enquiries. Once you have enjoyed some success your market visibility will increase, so expect more attention both from New Zealand companies wanting to benefi t from your efforts and unsolicited enquiries from overseas companies. These can often be very speculative queries from people who are not committed buyers.

Be selective about which enquiries you persue and concentrate on those from your main target markets. Validate any enquiries carefully, and always confi rm the importer’s ability to pay before sending any goods. You may want to use an agent to check the potential importer’s fi nancial credentials, such as how long the importer has been operating.

When you deal with unsolicited enquiries remember the old adage that ‘if it looks too good to be true, it probably is too good to be true.’

There are a number of steps you can take to protect your business and determine whether or not the enquiry is genuine in such circumstances. These include:

• requesting a copy of the company’s business licence

• requesting a copy of the company’s certifi cate of import/export authority (available from certain countries only)

• asking for references from other companies that they have dealt with in New Zealand and internationally

• checking out their website

• commissioning a company credit report to verify the company’s operations, territory, and payment history. You can do this direct via www.dnb.com for a nominal fee.

If in doubt, don’t do any deals.

4. Protecting your intellectual property 6C

Intellectual property protection in New Zealand does not automatically extend to other countries so you need to seek expert advice. The important principle in all intellectual property protection is to think ahead: take steps to prevent problems or confl icts before you begin.

The worst case scenario is entering a market place with a unique product or service only to fi nd that a competitor starts copying you. If the competitor is large then the damage will often have been done before you can react, even if you have some intellectual property protection in place.

PRICE FOR FLEXIBILITY

If you are entering into an ongoing deal, allow for fl exibility in your pricing right from the outset. It can be very hard to negotiate a price upwards once trade is underway.

SEE TEMPLATE 6B (Plan for success)

SEE TEMPLATE 6C (IP protection)



25

Remember potential customers or distributors will want to see that you have secured intellectual protection in their markets as it creates a signifi cant barrier to competitors, builds credibility, adds value and helps prevent other businesses copying your products or services.

An established market position in New Zealand may be of advantage when you export, but it does not provide freedom from competition where someone ‘piggy-backs’ on your designs and products.

Patent attorneys can help you establish and maintain ownership of any intellectual property you develop or seek to exploit. They can advise you about legal mechanisms for protecting your intellectual property in New Zealand, and when you should seek protection in overseas markets. Getting the right mix and timing depends on the type of product or idea and your plans for its commercialisation, marketing and distribution.

Patents Patents can provide an enforceable monopoly for 20 years to any person or company to exploit new and innovative products and process. It is essential your patent attorney establish a priority date prior to any disclosure, use or commercial dealing with your innovation. The priority date is the date that a patent application is registered as fi led with the Intellectual Property organisation in a market.

Registered designRegistered designs can provide an enforceable monopoly for a set period for certain new or original features of design, such as shape, confi guration, pattern or ornament embodied in an article. The monopoly period in New Zealand is 15 years.

As with a patent, it is essential your patent attorney establish a priority date prior to any disclosure, use or commercial dealing with the innovation.

CopyrightCopyright gives rights to the creators of original works, including those of literature, drama, music, recordings and computer programs. It also covers art, such as models and working drawings. Copyright, (noted by the symbol ©) allows the creators to control exploitation, and is granted automatically. In most countries it does not require formal registration, but double-check with your patent attorney that this is the case in the market you are going to enter.

Registered Trademark A trademark is an identifi cation symbol used to distinguish one company’s products from similar products made by others. It is noted with the symbol ® or ™.

Once you decide to target major markets you cannot rely on your New Zealand trademark protection. You must ensure your trademarks are available for use, and if possible, for registration in other markets.

The ™ symbol may be used when trademark rights are claimed in relation to a mark, but the mark has not been registered with the government trademarks offi ce of a particular country or jurisdiction. The ® is used to indicate that the mark has been so registered.

Registration can be renewed indefi nitely after the initial registration period. It is generally unlawful to use the ® symbol with a mark when that mark is not registered.

Although it is not mandatory to use either symbol, the force of convention is such that the symbols are widely used around the world. It is not necessary to register a trademark; however this does confer a statutory monopoly.

One disadvantage of the internet is that it is possible for someone to register a domain name in markets where the right to use the trademark may be owned by another party.

If you are selling your products over the internet and your trademarks are already in use in your target markets, this can cause trademark problems. It is essential that you consult your patent attorney for specifi c advice on this matter.

THE WORLD INTELLECTUAL PROPERTY OFFICE

The World Intellectual Property Offi ce (WIPO) has produced a range of information covering the various IP issues that you will need to consider with regard to exporting, available at its website (www.wipo.int).

THE INTELLECTUAL PROPERTY OFFICE OF NEW ZEALAND

The Intellectual Property Offi ce of New Zealand (IPONZ) provides useful information covering IP and business. Go to the IPONZ website (www.iponz.govt.nz) then click on Information Library in the left-hand column.



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Confi dentialityConfi dentiality conditions enable one company to disclose confi dential information to another while protecting ownership and use. These conditions are best established in writing. In some cases companies are reluctant to receive information under obligations of confi dentiality in case the external information overlaps with their own development work. If they then commercialise a concept based on their own work and confusion arises as to the origin of the intellectual property, this could lead to legal action.

Protecting your advantageOther ways to ensure partial continued control of your intellectual property when exporting include:

• capturing market share and reputation through speed to market

• practising continuous improvement and innovation to keep ahead of the fi eld

• maintaining low operating costs to create a price advantage

• targeting niche markets

• maintaining product design and quality ahead of likely imitators

• using marketing and branding which competitors need time to emulate

• maintaining secrecy about your process or formula

• providing a service valued by customers so they remain loyal.

Developing these traits is an important part of your export plan, as just owning a patent or trade name does not automatically guarantee success. The way in which you use intellectual property as an umbrella for your commercial or licensing activities can determine your success or failure.

Technology and innovationInnovative technology plays a major role in many of New Zealand’s new exports. If you are exporting technology-based products or services, you may need special entry techniques, delivery and support in the market. Ensure you budget for this.

Companies can experience diffi culties when bringing new products to market, caused by the type of technologies used by clients in the target market, and the rapid rate of technological change, combined with a slower than expected adoption rate by mass-market customers.

For example, EFTPOS gained rapid acceptance in New Zealand and is now in common use, but some overseas markets have been slow to adopt similar technology.

Waste SolutionsKnowledge and the ability to apply it are central to managing the risks associated with exporting, says Nathan Clarke of Waste Solutions. Mr Clarke manages a division that sells its design and consulting expertise in turning waste products into methane to South East Asia, Australia and the United States. Exporting accounts for around 70 percent of the group’s revenue.

As he comments, “You have to be willing to take a few risks to sell offshore but we’re not talking extreme commercial risks. It’s about having the confi dence to make assumptions and be proactive even when you don’t have full information. While Nathan Clarke says he generally fi ts the ‘risk neutral’ profi le in personality tests, he enjoys a challenge. “Knowledge is a major weapon in reducing risk. It gives you the confi dence to know you can deal with whatever happens.”

www.wastetechnz.com

DOMAIN NAMES

If you have a distinctive brand name or trademark, consider registering the relevant domain name. Note, some markets only allow local companies or foreign registered businesses to register a local domain name (for example, an .au domain or email address in Australia). You will need to check out different country domain registration rules.



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SummaryTo minimise your risk before exporting:

1. Research the political climate and cultural barriers in your chosen market.

2. Investigate your options for international payments and credit protection.

3. Insure against potential losses.

4. Research legal and regulatory differences and familiarise yourself with the terms used in international trade (see Glossary).

5. Put measures in place to protect your intellectual property.

6. Discuss export costing and pricing with your accountant. Remember to include packaging, shipping and freight charges, tariffs and taxes in your calculations.

7. Work out a policy for how you will quote for export orders. For example, FOB (free on board) and CIF (cost of goods plus insurance and freight). For more information on the terms used in international trade, read the article that follows or speak to your freight forwarder.

8. Discuss your plans with your bank to ensure that you are in a position to fi nance your exporting activities and the costs of entering a new market.


Funding your export driveExporting can put considerable fi nancial strain on your business. You may simply not have the fi nancial resources required for exporting, or you may have insuffi cient funds to move into some markets as quickly as desired.

To sustain your export drive it helps to have a ‘war chest’. You may need more funds than anticipated to fund travel, time away from your New Zealand markets, extra staff to cope while you are away, and other unforeseen expenses that may crop up.

A sound fi nancial base becomes even more critical if you are developing products specifi cally for a market, or if you need to develop and test prototypes.

At some stage you may have to consider investment or equity arrangements in order to implement your export plan. It is important to get fi nancial planning advice as early as possible to minimise any cash fl ow and capital diffi culties in the future.

Estimate your needs Be realistic when you estimate how much money you will need for your export venture. Make sure you include:

• how long it will take you to break even and start making some money from exports

• how much money you need to cover this period.

Ask your accountant, fi nancial advisor or export consultant to check your fi gures as well. To support your export plan you will need to take a full set of fi nancial documents with you when you meet with potential investors.

Do not under estimate the time required to seek external funding, both in elapsed time (typically 6 – 24 months) and distraction of management and governance time (typically 200 hours+ even when using external advisors).

Explaining your fi nancials Many business owners seeking investment funding fall down when they are questioned on fi nancial details. This can be because they are more interested in developing the product (or marketing it) than in the fi nancial angle. But investors will ask you questions such as:

• What is your projected gross profi t margin on export sales?

• What is your current and projected net profi t margin?

• What are your monthly variable costs for exporting?

• What are your monthly overheads (fi xed costs)?

- How have you performed against previous forecasts?

- How does your cost structure scale with increased revenue?

- What assumptions have you made in your forecasts?

As a business owner it is important that you own, understand and control your company’s cashfl ow and fi nancial position. You will be expected to utilise specialist fi nancial advisors either in house or service providers.

Sources of funding Export fi nance can be categorised in two types:

1. Debt funding (loans, leases, overdrafts, terms of trade etc.).

2. Equity funding (investment capital).

PREPARE YOUR BUSINESSSTEP 7: MAKE SURE YOU HAVE THE FINANCE

FINDING POSSIBLE INVESTORS

Your lawyer, accountant or other professional advisors often have extensive business networks and may be able to put you in touch with possible investors.

INVESTMENT WORKSHOPS

The Escalator service providesbusinesses with advice and assistance to raise funding and offers many resources including investment workshops that can help you get your business investment ready. For more information visit www.escalator.co.nz, call Escalator on 0800 822 748, or email [email protected]

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STEP 7: MAKE SURE YOU HAVE THE FINANCE

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1. Debt funding Bank and private institution fi nance A common source of funding for short and long-term exporting plans are private banks and fi nancial institutions. These funds, whether in the form of short or long-term fi nancing are typically for specifi c purposes, such as an overdraft to provide short-term working capital or a term loan to purchase buildings, machinery or other assets. Leasing and hire purchase arrangements also fall into this category.

Common forms include:

• Bank overdraft facilities. Overdrafts are useful for short periods. As pre-shipment fi nance, they can help with purchasing raw materials or processing. Post-shipment they can help you maintain your production programme until you receive payment.

• Term loans. These are usually used for fi nancing capital investment projects, such as setting up new plant for an export push. Terms are six months to fi ve years, and repayment is usually spread over the period of the loan.

2. Equity funding Unlike debt funding, equity funding is a capital investment in a business that does not attract interest or have to be repaid. Instead, the investors take a share of the business. They are looking for a good return on their investment and the opportunity in the medium term to on-sell their investment. There are several different types of investors.

• Family and friends can often be a good source of funding. If they have been following the progress of your business and believe you have what it takes to export successfully they may want to invest.

• Angel investors are high net worth individuals (often successful business people) who either lend you money at the early stages, or take and equity stake. Angel investors generally prefer to invest in areas or industries they are familiar with. They often have expertise and experience that can also assist in running your business.

• Venture capitalists manage funds on behalf of institutions or high net worth investors. They will provide more money than an angel and will also provide expertise, support, contacts and management help. Funding is usually only offered when you’re more established. They will take a share of your business, and are there to drive a business to sale of all or partial shareholding (i.e. to an eventual exit).

• Corporate investors will look to buy you out, usually once you are successful. Their main reason for this is for synergies they have spotted between your business and theirs (your business does something they don’t or does it better) as well as for sale and income generation.

If you need investment funding, be prepared for very close scrutiny of your business and your export plans. You will be investigated thoroughly and will be expected to share control of your business in the future. 7A

Investment Ready GuideIf you think you will need additional fi nance but are not sure if debt or equity funding would be best option, or if you want to learn more about the different types of investors, you should request a copy of NZTE’s Investment Ready guide. This is a free publication that details the different debt and equity funding options. It also profi les the different types of investors and outlines how you should prepare to pitch to an investor. To request a copy of the Investment Ready guide, call the Escalator service on 0800 822 748.

SEE TEMPLATE 7A (Export strategy)



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Escalator serviceEscalator is a service funded by New Zealand Trade and Enterprise that aims to make it easier for New Zealand businesses to access independent specialist advice and raise capital to grow by providing:

• expert evaluation of selected business opportunities

• access to a national network of private sector advisors.

No matter how strong your business case, raising equity is a challenge when you want to grow. Most business people will only conduct a small number of major fund raising deals in their life time, given the impact on your business and shareholder wealth, it wise to seek specialist advice and support to maximise the benefi t of the deal.

The Escalator service provides businesses with advice and assistance to raise funding and offers many resources including investment workshops that can help you get your business investment ready. The Escalator service can also be used for strategic partnerships and licensing deals that may help leverage your business performance in export markets. For more information visit www.escalator.co.nz, phone 0800 822 748, or email [email protected]

Government assistance Some businesses qualify for government funding or assistance. This is more likely to be forthcoming if your business concept has the potential to provide signifi cant employment and/or generate signifi cant foreign exchange (export dollars) for the New Zealand economy.

To fi nd out if your business qualifi es for any kind of government assistance visit the NZTE website www.nzte.govt.nz

You may be eligible for assistance with promotional funding under the Market Development component of NZTE’s Enterprise Development Grant (EDG-MD) which helps companies undertake new offshore market development activity. Eligible projects and costs include market visits, in-market representation, and advertising/promotion/marketing materials, exhibiting at trade fairs and events, and market research.

The EDG-MD is based on a co-funding arrangement with the company, and will cover up to 50 percent of your project costs for market development up to a limit of $100,000 in any one year. Visit www.nzte.govt.nz for more information.

If you have an advanced technology business or business concept, you should also visit the Foundation for Research, Science and Technology site at www.frst.govt.nz or contact their nearest regional offi ce for details of possible support or funding programmes.

EXPLORE ALTERNATIVES

Explore the alternatives to investment fi nance with your senior staff and advisors.

SPECIFIC EXPERTISE

You may be looking for specifi c expertise from investors, for example contacts in overseas markets or distribution channels. If so, mention this so that potential investors can gauge what value they can add to your business.


Understanding regulationsTrading rules and regulations vary from country to country and import legislation can be both complicated and confusing.

Gaining a clear understanding of your obligations makes sound business sense, but because regulations can be complicated we recommend you use professionals to help manage the process.

It is important to get every aspect of compliance right because failure to comply with the relevant laws or regulations can be expensive and may also damage your business credibility. In addition to complying with the regulations of overseas governments, you may also need to meet customers’ regulations as this case study illustrates.

Old Fashioned FoodsOld Fashioned Foods, which produces the famous Aunt Betty range of products, is establishing new markets in North America and in Europe.

“You have to put something on the line to prove your credibility and accept there will be plenty of knocks along the way,” says Managing Director Ross MacKenzie. That might mean spending twice the value of an order to get it to its destination on time.

“Our fi rst consignment of steamed puddings for Sainsbury’s in the United Kingdom was rejected because delays at their end meant the product didn’t comply with shelf life requirements. We responded by air freighting a container of puddings worth NZ$50,000 profi t at a cost of NZ$100,000. It was our fi rst big breakthrough in the UK and we were determined not to miss the opportunity. Now we send half a million puddings to the United Kingdom each week.”

He is adamant that exporting is no different from selling on the domestic market, although the distances and lead times bring particular challenges. “A lot of aspiring exporters think they’ve done the job when they close the container and put it on a boat, but that’s only the beginning. At times we’ve been asked to do things in offshore markets that seem totally unreasonable but we usually fi nd out later it is standard practice in that market.”

www.oldfashionedfoods.co.nz

Entry requirementsOften complex information on entry requirements may only be readily available in the local market and may not always be clear or applied in a straightforward way. As you need to follow strictly all applicable regulations to avoid shipment delays, fi nancial penalties and/or storage charges, do your research thoroughly and talk to experienced professionals before you export.

NZTE staff may be able to help you identify which regulations will apply to your product by market or put you in touch with someone else who already exports there and has fi rst-hand experience of complying with local requirements.

Given the complexity of export compliance you may wish to use the services of a professional customs broker or freight forwarder.

Customs brokers and freight forwarders can help to:

• prepare export documentation

• advise on the best methods and routes for transporting goods

• classify your goods into different import fee or tariff groups

• negotiate and arranging transport of goods with shipping or freight companies

• calculate duty and GST payments

• arrange the insurance cover for goods and dealing with claims for loss or damage.

PREPARE YOUR BUSINESSSTEP 8: UNDERSTANDING COMPLIANCE

COMPLY TO COMPETE

A comprehensive understanding of a market’s compliance requirements can also give you a competitive advantage in the marketplace.

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STEP 8: UNDERSTANDING COMPLIANCE

32

Ask your business contacts for recommendations or look in the phone book or online for a business with experience in your chosen market. A list of those affi liated to the Customs Brokers and Freight Forwarders Association (CBAFF) is available at www.cbaff.org.nz

Barriers to market 8A

Tariff and non-tariff barriers may impede getting your product to market. Tariffs are taxes or duties imposed by the government of the country you are exporting to. Non-tariff barriers may include registration, standards and quality requirements, all of which can be costly and complicated to meet.

Check the general rules of trade to discover any barriers to exporting goods or services to your target market, then confi rm that your product or service meets specifi c individual regulations, such as registration or labelling.

Things to think about include:• What tariffs/duties will the target country apply to your products?• Are there standards, testing or other forms of certifi cation required?• What regulations are in place for labelling and packaging?• Are there any product liability issues to consider?• What export documentation is required?• What local trading and employment laws will you need to comply with?

Tariffs and duties Tariffs are duties payable on imported goods. Rates can vary widely according to your product category and country of origin, and can affect your product’s competitiveness against domestic suppliers and imports from other countries.

The New Zealand Customs Service can help you identify the New Zealand tariff number and description for specifi c markets for your products.

This information is published in the Working Tariff of New Zealand document which is available at www.customs.govt.nz/lib or by calling your local Customs Service on 0800 428 786.

You can then check the actual duty the product attracts in your market:• by contacting the Customs Department in the importing country• through the Ministry of Foreign Affairs and Trade website (www.mfat.govt.nz)• through freight forwarders and customs brokers.

Tariff rates are generally set as a percentage of the monetary value of the goods. You can access information on different market tariffs.

Product standardsIt is essential to check that your product complies with the relevant standards in your chosen market before shipping any goods. Non-compliance can be costly.

NZTE may be able to supply you with:• a summary of relevant compliance requirements. For example, import/export licences,

quotas, phytosanitary/veterinary requirements, acts, standards, labelling and packaging requirements

• copies of all relevant acts and standards where available• samples, brochures and product descriptions submitted to the relevant authority• web links and web addresses for relevant compliance organisations• comment on known planned changes to regulations.

Note: This service may incur a fee.

COMPLIANCE ISSUES

Compliance issues can be particularly complex in countries where different regulations apply at national, state and local levels. Local advice can be invaluable. Having a local importer or agent means you can also receive ‘on-the-ground’ information on legal requirements and ‘market quirks’ when importing into different countries.

COMPLIANCE COSTS

Anticipate compliance-related costs and allocate funds and resources in your export plan to overcome any barriers to market.

Always remember to verify and take tariff costs into account when calculating your selling price.

INTERNATIONAL CUSTOMS AUTHORITIES

Sometimes you will need to obtain fi rm rulings from overseas customs authorities on duties in their market for specifi c products. The New Zealand Customs Service provides links through their website Library (www.customs.govt.nz/lib) to a comprehensive list of international customs authorities.

SEE TEMPLATE 8A (Compliance checklist)



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Product liabilityCheck who is legally responsible for the safety of the products you make and sell. Some countries have product liability legislation which makes manufacturers, distributors and/or retailers legally responsible. You may be liable for any injury or damage overseas caused by any defective products. For example, if you manufacture children’s toys, you will need to meet strict regulations in most markets covering safety and quality standards.

Product liability settlements can be expensive, particularly in the United States where million-dollar settlements are not unusual. Wherever possible you should have the appropriate insurance, remembering that this is another cost to include in your pricing.

Try to assess and discuss the risk of liability with potential distributors in markets with a high threat of prosecution. Consider talking to a lawyer who is familiar with your market – NZTE may be able to refer you to a local expert. Seek legal advice on your particular situation, and fi nd out how to best to protect yourself and gain cover against legal action.

The fi rst level protection – and often a condition of acceptance by importers and a criterion for insurance cover – includes ensuring that:

• products meet specifi cations

• warnings are placed on packaging

• instructions for use are clear, especially if there is any possibility of danger from accidental or deliberate misuse or failure.

Packaging and labellingEnsure you check packaging and labelling regulations early on in the process. Requirements vary in different markets and you may fi nd you need to use different materials, packaging sizes or need to translate labeling information for each market to which you export.

Packaging regulations may control:

• the composition and use of different packaging materials

• size and construction

• reusable or disposable packaging

• packaging of hazardous materials or perishables

• permissible or acceptable claims about your product’s benefi ts.

Labelling and marking regulations are designed to protect consumers by providing essential information on the product. For example, clothing usually needs to carry care labelling. Specifi cations may include:

• instructions on whether the garment should be washed or dry cleaned

• descriptions of the materials used

• country of origin labelling

• fl ammability warning labels on certain fabrics.

If you are dealing with hazardous substances, there may also be regulations relating to the disposal of your packaging. For example, in Europe pressure is increasing for manufacturers to take more ‘cradle to grave’ responsibility for their products. You may be required to take responsibility for recycling or eventual safe disposal of products or hazardous product components (such as batteries) that pose a threat to the environment.

Talk to someone already manufacturing goods for your intended market if possible. Your industry association, local NZTE offi ce or Chamber of Commerce may be able to recommend a business contact you can talk to.

INTERNATIONAL STANDARDS BODY

Standards New Zealand can supply standards from other international standards bodies. Call customer services on 0800 735 656 or email [email protected] with details. You may also fi nd the downloadable ‘Guide to CE marking’ article helpful. Visit www.marketnewzealand.com and select ‘Exporter information and services’.

GET YOUR IMPORTER TO CHECK

Send a sample of your product to your importer or agent and ask them to check that everything complies with local regulations or standards.

COMPETITIVE ADVANTAGE

Showing you fully comply with (or even exceed) environmental regulations can be used to your competitive advantage. If you promote your business as ‘environmentally responsible’, it can help you be seen in the market as a business that ‘cares’.



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Regulations for foodstuffs are particularly stringent and may require information on:

• product name

• form, such as smoked or frozen

• coding of additives, colourings and fl avour enhancers

• name and address of importer

• country of origin, and name and address of manufacturer

• date of manufacture, or date by which product must be consumed

• storage requirements

• ingredients in order of relative importance, often by weight

• instructions for preparation or use, particularly any precautions required

• net weight shown in measurements used by the importing country

• translations of information in the required language of the importing country.

Bar codes and tracking chipsDriven by the increasing use of electronic identifi cation for goods in transit or in-store, bar coding, or product numbering, is essential in many export markets.

As each product unit is given a unique identifying number, (every variation in colour, size and pack has a separate number) bar coding provides a common stock-handling method for manufacturers, wholesalers and retailers. Often directly related to an ordering and inventory control system, bar coding or electronic tracking through embedded product tracking chips is increasingly becoming a prerequisite to products being considered by major buying organisations and end-users.

Each country has a coding authority which assigns codes to manufacturers and maintains a central database.

Your distributor should be able to advise you which codes are required.

Rissington BreedlineSpecialist sheep and beef breeders Rissington Breedline exports lamb products to Marks & Spencer in the United Kingdom market. The product is processed further on arrival in the United Kingdom and labelled with the Marks & Spencer brand and the name of the farmer who provided the original lamb. For consumers, who increasingly want to know where their food comes from, this means they can look behind the label and trust the food they are eating.

www.rissington.com

Marking

Marking regulations apply to transport containers and vary from country to country. Freight forwarders, shipping companies or airlines can advise on current requirements. These can include:• marking gross and/or net weight or volumetric measure• serial and invoice numbers• container dimensions• name and address of importer• transit instructions• country of origin• handling instructions shown in internationally accepted symbols or words• translation into the language of handling or importing countries.

All required labelling and marking should be clear and durable.

OUTLINE TERMS OF TRADE ON WEBSITE

2006 NZTE Export Award winners phil&teds use their website philandteds.com to outline terms of trade, product specifi cations, warranty terms, product care and product instructions.

CODING SYSTEMS

New Zealand uses the EAN (European Article Numbering) coding system which is compatible with product numbering systems already used in Japan, Australia and Europe. Each country using the EAN system maintains a separate Article Numbering Association.

The United States uses the UPC code.

ELECTRONIC TRACKING

Electronic tracking systems have become a lot more sophisticated, and are rapidly evolving. Keeping up to date with electronic identifi cation tracking technology may give you a competitive advantage with speed to market. GS1 New Zealand is a non-profi t association that provides the identifi cation of items, trade and logistic units, services and location. For more information visit their website, www.gs1nz.org



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Export documentationExporting can be a bureaucratic business, so get help to ensure that you comply with all regulations, including those you may not be aware of.

The contract between buyer and seller sets out the terms of the export shipment. These include prices, specifi cations of goods, packing, conditions of carriage, dates of shipment and payment arrangements.

All details must be carefully recorded and checked, as they will be included on other documentation. Any defects in documentation, such as omissions or confl icting information, will inevitably cause delays. These can delay or put payment at risk, incur additional and unnecessary expense, and ultimately damage your reputation.

If you are exporting under a letter of credit speak to your bank about the obligations and requirements. Freight forwarders, freight consultants and banks can also explain and handle your export documentation requirements, as well as negotiating best freight rates.

Most exporters use the experts to perform this role to ensure accurate advice and export documentation compliance.

Basic export documentation• Export entryAll exports with a value over NZ$1,000 FOB (unless otherwise exempted) must be supported by an export entry lodged with the New Zealand Customs Service. Failure to lodge an export entry may incur penalties and unless Customs has otherwise approved, entries must be lodged with them 48 hours prior to export.

Information required on the entry includes description of goods, plus:• tariff item number (a freight forwarder can help you identify the right HS Code)• statistical quantity where required number and kind of packages• New Zealand dollar FOB value• gross weight• whether travelling by ship/aircraft, and ship name or fl ight number.

Export entries may be lodged electronically by accessing on the NZ Customs Online Declarations website www.cusweb.co.nz. Electronic Data Interchange (EDI) software is often purchased by companies with a high volume of entries so they can electronically transfer their entries to Customs.

If you are a fi rst-time commercial exporter, your local Customs offi ce can send a frontline offi cer to help you get started with this documentation. Contact them online via www.customs.govt.nz or call your local Customs Service on 0800 428 786.

If the exported goods contain imported goods upon which duty has been paid, or they are excisable goods upon which excise duty has been paid, you may be entitled to claim drawback of this duty. Again, check with your local Customs Service offi ce.

Commonly used documentsSee glossary for a list of Incoterms.

Although every country has its own particular requirements, there are a number of commonly used documents in the export process.

• Commercial invoice (certifi ed invoice)

This is the ‘charge’ document, containing details of the seller, buyer, goods, price, terms of sale, such as FOB or CIF. As this document is used to clear your goods, it must follow the requirements for Customs in the importing country.

KEEP PAPER COPIES OF IMPORTANT DOCUMENTS

Despite electronic transmission of documentation and reporting procedures becoming more common, hard copies and paper fi les are still important for legal and tax purposes when moving products across borders.

CUSTOMS DECLARATIONS

Be aware that even when you use a customs broker or agent in the clearance of goods through Customs, any declarations or actions undertaken by them in the export process are deemed also to have been made by you, the exporter. You may be liable for any or all penalties that are incurred by the broker or agent in this clearance process whether the broker or agent is located within New Zealand or overseas.

ASSISTANCE

Your local Chamber of Commerce may be able to offer advice and can assist with issues such as:

• special documents and certifi cation procedures that may be required for the country of destination of your goods

• legal validation of trade documents by overseas embassies.



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• Bill of lading (B/L)

This is issued by or for the shipping company and serves as a receipt for goods uplifted for shipment. It is also a contract of carriage and a legal document of title. On delivery of the goods the consignee is required to surrender a negotiable copy of the bill of lading to take possession. Variations of these documents are a marine bill of lading, a combined transport document, or house bill of lading.

• Airway bill (AWB)

The AWB is equivalent to a bill of lading for goods sent by air. Courier companies often have their own additional documentation, unique to that transaction, which travels with the goods.

• Certifi cate of origin

The origin of goods has a direct bearing on the rate of customs duty. Certifi cation of origin may be incorporated in the commercial invoice, but often a separate document, issued or countersigned by the Chamber of Commerce in the country of origin may be required.

• Certifi cate of content

You may sometimes be required to provide this informal document. It demonstrates the New Zealand content if you are claiming any preferences on entry into some markets (especially Australia), or avoiding penalties in others.

NZTE or your freight forwarder can help with deciding what constitutes acceptable content.

• Insurance policy certifi cate

The insurance document must comply with any terms in a letter of credit. The insurance coverage of goods being shipped without a letter of credit is determined by arrangements between buyer and seller.

Cargo insuranceYour export goods should be well covered by insurance, and both parties to the export transaction must be fully aware of their responsibilities.

Note that you may have an insurable interest long after the goods have left your possession, while your buyers could be ‘on risk’ before the goods are actually received.

The terms of cover are usually laid down in the sale contract or letter of credit. Three common categories have been developed by the Institute of London Underwriters. These ‘Institute Clauses’ are used internationally.

• Free of particular average (FPA) is restricted cover, and is basically confi ned to total losses from marine perils of a package during loading, transhipment or discharge. Claims for partial loss or damage cannot be recovered unless the vessel is stranded, sunk, burnt or in collision.

• With average (WA) cover extends the FPA clause to include partial loss arising from heavy weather and sea-water damage.

• All risks (AR) covers all risks of loss or damage. However, it excludes loss or damage arising from delay, inherent vice or the nature of the goods insured. Events such as goods lost because of inadequate packaging, weight loss from drying out or market loss are not covered by this clause.

Marine open coverMarine cover guarantees cover up to a specifi ed amount for all goods in which you have an interest. Exporters must provide details of each shipment made. However, if the declaration is delayed or lost, continuity of cover is guaranteed even after a claim has been made.

LETTER OF CREDIT

Goods being sold under a letter of credit must be described on the invoice exactly as in the letter of credit. This invoice must also meet any other requirements stipulated in the letter of credit, and show marks and numbers of packages as on the bill of lading or other transport documents.

BILL OF LADING

The bill of lading is now used less frequently in international trade due to extensive containerisation and multi-mode transport, such as land/sea, covered under one contract of carriage.

CER RULES

The rules for content between Australia and New Zealand are part of the Closer Economic Relations (CER) agreement between the two countries. Learn more at www.med.govt.nz by entering ‘CER Rules of origin’ in the Search box.



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Marine open cover is generally open-ended with no expiry date. Either party can cancel, if they wish, with prior notice.

Working directly in your export marketAs with entry requirements, employment legislation varies from country to country. If you are intending to establish a branch offi ce or employ staff in the country you are exporting to, you need to check the local market’s legislation to ensure that you comply with all HR laws and requirements.

For example:

• if you are trading in Brazil you must form a Brazilian company before hiring any local employees

• all employees work a mandatory 35-hour week in France

• in China wholly foreign owned enterprises must provide local employees with a written agreement in the prescribed Chinese language.

Always seek expert legal advice before starting to trade or employing staff overseas.

Online salesIt is important to remember that selling your products or services online does not absolve you from compliance requirements. Consider these six steps to protect yourself and your customers.

1. State your terms of trade, refund or return policies, privacy policy and any guarantees you offer very clearly on your website. If warranties, guarantees, returns or after-sales service don’t apply to overseas purchases, make this clear.

2. State your physical location in New Zealand and clarify how disputes will be resolved.

3. If overseas people buy from your website, state which currency applies (for instance, New Zealand dollars, US dollars or Euros) and if there are any extra charges, such as extra shipping or insurance charges (it is a common mistake to omit these details). If appropriate provide a currency converter for customer convenience.

4. Clarify the level of security you offer for online transactions that require customers to enter personal details and credit card information. Customers need reassurance.

5. If you have patents, copyright or brand protection, feature this information prominently on your website to deter thieves or imitators.

6. Ask an expert to evaluate your online trading systems to make sure it is ‘best practice’.

SummaryAlthough export rules and regulations will vary from country to country, they will always exist and it is always important to get them right. Find out as much as you can about your market to get a broad understanding. Then save yourself time and money by talking to, and ideally engaging the services of, experts when exporting to a market, particularly for the fi rst time.

INSURANCE BROKER

Always talk to an experienced broker about your specifi c insurance requirements. If you are looking for a broker, check with your bank as they may be able to offer insurance or recommend a suitable company. Alternatively, ask other exporters or search the internet for export brokers (see for example www.cbaff.org.nz).


Can you deliver? Part of securing export orders is making sure you can deliver. Many Kiwi exporters have underestimated the volume opportunity they encounter overseas. Before anyone from your business travels overseas prospecting for business, give some thought to what might happen if your export quest does succeed. In particular, do you have the resources and capacity to deliver?

Fulfi lling your fi rst export commitments on time and within budget can be crucial to your future success. In many cases it can be diffi cult enough to sell your product or service from a country regarded as distant and tiny by overseas customers. This makes it all the more important to demonstrate that you have the ability to be a committed and reliable supplier who can meet demand on time and within budget.

For example, after showing samples to an overseas customer, the owner of a New Zealand business was delighted to receive an order for a whole container load. He promptly signed an agreement to deliver the goods by a set date.

However, when he got back home he discovered that the major supplier of a critical component did not have the capacity to deliver the required quantity of components within the agreed timeframe. As a result, the order was shipped late. Fortunately the contract did not have a penalty clause for late delivery, but the business still lost considerable goodwill with the overseas buyer and suffered from reduced credibility.

All this could have been avoided if the business owner had checked fi rst with the component. Here are some guidelines to ensure you can meet demand:

Product-based exports 9A

If you manufacture products (or outsource manufacturing to others) then consider these factors:

• Do you need to invest in more capacity? Can you scale up your present manufacturing capacity?

• What extra equipment might you need? It is worth completing some contingency planning in advance. For example, if the machinery you need has to come from overseas, what is the delivery time? If the machine is a later model from existing machinery, will you need technical help to install the machinery and train staff in its use? You need to take these factors into account when you negotiate delivery timeframes.

• Can you secure the fi nance for this equipment? Sort out possible credit lines in advance.

• What extra staff would you need? Can you secure skilled operators at short notice in a tight labour market?

• How will any extra costs affect your product pricing? Greater volume production may mean that that unit costs are lowered, but then the capital and implementation costs outlined above may negate this, at least in the short term. You need to sit down with your accountant or fi nancial advisor to review your pricing strategy.

• Can you source the materials and components? Check that your suppliers have the capacity and commitment to help you fulfi l any export orders.

• Do you need to source alternative suppliers? Are your suppliers capable of gearing up for much larger export volumes? Good contingency planning should include research into alternative sources of supply, and obtaining sample and prices from possible suppliers.

• Can you maintain quality and consistency? Quality issues can compound when you are producing larger volumes, and the last thing you need is for a whole shipment to be rejected because it is substandard.

• Can you sustain export deliveries? Fulfi lling one large export order can be a satisfying achievement, but what if you have to do this on a regular basis? What would the impact be, for example, on your local customers?

SEE TEMPLATE 9A (Product-based export issues)

PREPARE YOUR BUSINESSSTEP 9: CAPACITY, CAPABILITY AND LOGISTICS

38


STEP 9: CAPACITY, CAPABILITY AND LOGISTICS

39

• Can you manage the whole process? It is important to have a good project management system in your business. Ask your business contacts or industry association for advice on suitable project planning software.

If you outsource the manufacturing of your products, then work through these same questions with the manufacturer.

• Do they have the capacity, willingness and fi nancial capability to scale up if necessary? Are they committed and effi cient enough to do this, can they secure the fi nance and can they maintain the required quality?

• Do you need to manufacture overseas? Would it be better to source a manufacturer closer to (or in) your export market? How long would this take to set up to the required standard and what are the risks?

Service-based exports 9B

The export capacity challenges for service based exports might seem easier, but in fact many of the issues are similar. Where a manufacturing business might have to install extra machinery to gear up for volume demand, a service based business might need to consider extra staff and resources. Here are some of the issues.

• Do you need more staff? For example, you may need now to fulfi l export orders and keep your existing customers happy. Can you quickly recruit people with the right skills you need? What extra costs will you incur?

• What fi nance do you need? You may need to purchase any extra equipment such as computers or offi ce furniture. Find out in advance if you can get a credit line from the bank.

• How long will it take to get paid? There may also be a considerable gap between securing an export order and getting paid for it. For example, if you are developing a customised software package for an overseas customer, the project could take many months to complete. In the meantime, you still have to pay wages and salaries and other outgoings.

• What extra working capital do you need? Meet with your accountant or fi nancial advisor to work out how much you need in the way of bridging fi nance. Then decide if you can fund this through debt fi nancing (such as a credit line from the bank) or if you need to look for investment funding.

• How will extra costs impact on your pricing?

• Can you subcontract some of the work? An alternative to taking on permanent staff is to use part-time staff or subcontract parts of the work.

• Can you sustain export deliveries? The excitement of successful exporting can lead to neglect of your existing customers or a drop off in service levels.

• Can you manage the project? It is important to have a good project management system in your business. Ask your business contacts or industry association for advice on suitable project planning software.

Case studyA Christchurch-based company that supplies training resources to overseas customers has developed a network of reliable subcontractors who can be ‘bolted on’ to work on larger projects. As these subcontractors are not employees, their services are linked to lifespan of specifi c projects and the company does not have to meet any on-going extra overheads when a major project is completed.

QUICKLY SOURCING MORE STAFF

Keep a fi le of possible applicants for positions you may need to fi ll if you gain an export order that will stretch your resources. You may need to consult employment specialists.

PROGRESS PAYMENTS

Including progress payment agreements in export contracts can help fund working capital requirements.

SEE TEMPLATE 9B (Service-based export issues)



40

Cash fl ow management and overtradingBoth product and service type businesses need to pay careful attention to cash fl ow management. Complete your cash fl ow forecast before you approach the bank or any other lenders or investors. If you do too much business you may be in danger of overtrading; a situation that causes the collapse of many businesses. Defi ned simply, overtrading occurs when a business trades beyond the capacity of its cash and debt funding resources to fund commitment.

Delivery methodsIn Step eight: understanding compliance you worked through many of the issues associated with exporting. Here are some further considerations around export logistics.

A good understanding of freight and delivery options is needed to price your goods accurately and get them to market cost-effectively. You also need to understand the services provided by freight forwarders, customs brokers, transport companies, couriers, air express companies, airlines, shipping companies and others in the freight industry.

Your chosen delivery method will depend on the type and value of your product, the urgency of the order, and level of market development.

Freight arrangements need to take account of manufacturing and purchasing which is increasingly done ‘just in time’. There is also growing demand for quick delivery of specialised products, spare parts and replacements. Airlines, couriers, air express and air freight consolidators are all responding to this trend to fast delivery from New Zealand into our major export markets.

Freight forwarders and air express companies provide a wide range of services, allowing exporters to offer door-to-door delivery and minimum delivery periods. These include overnight services into most Australian centres from major New Zealand centres.

They also offer warehousing and other distribution services from major international hubs in Australia, Asia, North America and Europe.

You can review some common freight terms in the glossary of this guide.

Determine your logistics 9C

Getting your product to market can be more complicated than people expect. It is important that you understand the methods and costs involved so that you can structure the best possible system for getting your products to market.

If you export a service (for example IT services or software) then shipping is possibly a low priority. Some businesses can email their product to their overseas customer.

However if you are faced with exporting product that needs to be packaged and shipped, then you need to consider all your logistics such as:

• freighting of the fi nished product to a port or airport

• delivery of the fi nished product

• transport.

Consider also:

• Storage of fi nished product. How long does the product have to wait at the port/airport? This is especially important for perishable products. Delayed shipments can have an adverse affect on perishable goods. Be sure to have all paperwork and certifi cation in order.

• Insurance. Make sure there are no ‘gaps’ in the insurance coverage from when product leaves your business and arrives safely to the customer.

TEST SUBCONTRACTORS

Using subcontractors can seem an easy way out of the capacity challenger, but it can be harder to control quality and reliability. Try to test subcontractors on smaller projects before you use them on a major or critical export project.

GET PROFESSIONAL ADVICE

Get help from your accountant or fi nancial advisor to identify and monitor the key fi nancial performance indicators in your business, such as the Current and Quick ratios and your Debt to Equity ratio. Consult them also if you gain signifi cant export orders to discuss how these can be fi nanced and managed.

SEE TEMPLATE 9C (Logistics issues checklist)



41

Freight forwarderConsult a freight forwarder and customs broker at an early stage in your export planning as they can reduce many of the problems associated with direct exporting. They also have the experience to help you fi nd the most cost-effective ways to move trade consignments around the world.

They can:

• provide transport from your premises to the port/airport

• pack product onto pallets

• prepare the necessary export documentation, customs permits and licences

• quote a “through rate” that is, delivered to destination (CIF or CFR) or simply ‘FOB’ Freight on Board (that is, all charges to be collected from consignee at destination excluding origin charges to load cargo).

Information your freight forwarder needsWhat you are shippingTell them exactly what it is so they know what they’re dealing with and how to handle it. For instance, certain goods are considered hazardous and so need special permits and approvals to be exported. Other goods may need to be stowed in specifi c areas of the vessel/aircraft, away from incompatible products. Be as specifi c as possible this can help speed processes up and avoid issues later.

How your product is packed• How many units per box, boxes per carton and cartons per palette

• Weight and dimensions of each box/carton/palette, as LCL (‘Less than Container Load’) weight is calculated by cubic metre.

Special requirements of your cargo• Temperature controlled (i.e. refrigeration)

• Insulated

• Airfreight (due to short shelf-life)

• No transhipment via ‘hot countries’ (i.e. must ship DIRECT to Japan, no transhipment via Singapore).

DeadlinesIn order to help the freight forwarder do the best job they can, you need to abide by any deadlines for product, information and documentation they set. They may also require certain documents/information from you by a certain date. This is because they need to make an electronic submission of what is being loaded into a container prior to acceptance at a wharf/airport.

These deadlines may be required both to meet New Zealand requirements and rules/regulations in other countries. For example, the United States and Canada have a stipulation that all documentation must be submitted 24 hours before vessel arrival in load port – that is so that the Federal Maritime Council can scrutinise what is coming into or transiting through United States – if they don’t approve, they will not allow the container to be loaded on the vessel.

LOCATE A FREIGHT FORWARDER

Locate a freight forwarder and customs agent through www.cbaff.org.nz or the Yellow Pages (keywords – customs brokers, transport and forwarding agents, air cargo services). You could also ask your business contacts for recommendations.



42

DocumentationAdvise the freight forwarder of all export contract conditions so they can help you comply with the terms of your export sales contract (or buyer’s purchase contract).

If you are shipping under a Letter of Credit (LC), photocopy this and share with them – they are not interested in your sale price, but need to know:

• who the shipper is

• who the cargo is consigned to

• any stipulations regarding shipment

• latest shipment dates, document presentation dates, LC expiry, etc.

Some further considerations:

• Your product is lost in transit or damaged. Freight can be covered by insurance. You can also insure against product and professional liability, and product recall or tampering.

• The customer wants to return your product. Customers can change their minds, order the wrong product by mistake, or your product could be faulty. Regardless of the reason, you may have to pay for the product to be shipped back. Your price should therefore factor in a margin for returns.

• Your product gets quarantined or rejected. Like New Zealand, some overseas countries have quarantine requirements and strict enforcement. Do your homework on what is and what isn’t allowed in your targeted overseas market. Refer fi rst to the Customs Department of the importing country then if necessary contact NZTE for more help.

SummaryThe focus of capacity and logistics planning is to ensure you:

• have the capacity to export and if necessary sustain and expand your exporting business

• can establish a reputation as a reliable supplier of quality goods or services

• can maintain goodwill and credibility with your existing customers by continuing to provide them with high service levels.

DETERMINE ANY SPECIAL REQUIREMENTS IN ADVANCE

If you intend exporting to security sensitive locations such as the United States, contact your freight forwarder well in advance to determine the special requirements and iron out any problems.


STEP 10: BUILD A PROMOTION PLAN

43

Use the right promotionPromoting your company overseas is a key step in the export process.

The promotional tactics you use to build a market presence and create demand for your product or service will depend on a number of factors, including your overall objectives, local market preferences, your budget and your timeframe.

Without clear direction, it’s easy to get distracted and for your promotional activities to become fragmented. Preparing a simple, practical eight-step promotion plan gives focus and direction to your marketing effort.

An ideal plan integrates a range of tactics and outlines clear, practical steps that can be put into action immediately.

1. Review your overall export aim 10A

Keep your overall aim in mind when planning your promotion. What you ultimately hope to achieve will infl uence your choice of promotional tactics. For example, your aim might be to sell:

• through a local distributor

• directly to the consumer online

• directly to the consumer in the local market.

2. Defi ne your target market 10B

Effective marketing is always targeted. Marketing to ‘everyone’ is not workable, especially in an overseas market. To avoid spreading your promotional time and money too thinly, design your promotion for your selected target.

When you export to a new market you are introducing your product or service to a different audience. Remember that even in English speaking countries there will be cultural differences.

If you are marketing to consumers, you may need to research what they read, listen to or watch. If you are marketing to other businesses, research industry-specifi c journals, websites or other media that might reach them.

3. Set clear promotional objectives 10C

Be specifi c when writing your objectives. Keep them brief and quantify your desired results. Having clear, measurable objectives gives your promotion plan purpose. They also form a benchmark to monitor, evaluate and improve on the results of your promotional strategy.

4. Develop tacticsOnce you are clear about your promotional objectives, you need to decide which tactics, or blend of tactics, will bring about the best results for your business. If you are targeting overseas suppliers or distributors, your tactics might be designed to get an appointment or a meeting. The tactic might be to send out a direct mailing package with brochures that you can follow up with a phone call. Or it might be an advertisement in a trade journal designed to prompt further enquiries or even generate immediate sales.

Some of the more common promotional options are outlined below, many of which you can implement from New Zealand. Others will require overseas activity.

RESEARCH OTHER BRANDS

Researching other brands already established in your target market will help you learn about potential competitors, products and services. Analysing how these are promoted provides market information critical to your promotion plan.

WEBSITE ADDRESS

Your website address will look more professional if it is a domain name specifi c to your company, rather than a generic service provider domain name. For example, use www.possumsocks.co.nz rather than www.xtra.co.nz/~possumsocks

Even if you don’t yet have a website, consider registering your domain name and using it for emails.

SEE TEMPLATE 10A (Export aim)

SEE TEMPLATE 10B (Target market)

SEE TEMPLATE 10C (Three key objectives)

IMPLEMENT YOUR STRATEGYSTEP 10: BUILD A PROMOTION PLAN



44

Web promotion 10D

With a virtually limitless reach, your website is possibly your most versatile offshore promotional tool. As different sections of your site can be tailored to appeal to different target audiences, you can promote directly to your primary export target market without having to leave New Zealand.

Many businesses overcome language barriers by having their website content translated into the target’s relevant language. If budget is a factor, you may want to consider producing a cut down version of your website for translation which only contains the key information for your target market. For example, if not all your products can be exported, only include information on those that are available to your target market.

Online exposure 10E and 10F

Online directories can be an effective way to gain exposure in a market, with many providers offering a free service. Search for ‘online directories’ and the country name, then add your listing to those that best refl ect your target market.

Check with your relevant industry association or business membership organisations too as they may also offer directory listings to members.

Industry websites can also provide a great platform for free exposure. Online editors often seek fresh content, so if you can offer specialist knowledge or industry insight, consider writing ‘tips’ or ‘articles’ free of charge.

Free media exposureMedia advertising is generally expensive anywhere in the world so before booking an expensive advertising campaign look fi rst for alternative ways of obtaining publicity for your products or services.

New Zealand Nature CoNelson-based New Zealand Nature Co exports a wide range of New Zealand-themed products, from sheepskin boots to possum fur body warmers, with the bulk of sales made through its website and by mail order to more than 70 countries around the world.

The company benefi ted from some invaluable publicity a few years ago, when its possum fur body warmers were featured in Playboy magazine. CEO Ben Van Dyke says the promotion led to a huge number of hits on its website with most of those visiting the site to buy body warmers buying other products as well.

www.nznature.co.nz

Trade magazines 10G

Editorial content about your product or service in professional or specialist trade magazines can boost your profi le in target markets. Specialist trade publications often have a section profi ling new and unusual products. If your product is particularly innovative or has a novel angle, approach the editorial staff of these publications to see if you can gain some free editorial coverage.

The direct approach 10H

With the rapid advancement of e-business it can be easy to forget the effectiveness of more traditional tactics such as personal contact or the direct approach.

SHOWCASE YOUR BUSINESS ONLINE

You can apply online atwww.marketnewzealand.com to showcase your business to international buyers through NZTE’s New Zealand Exporter Directory online trade enquiries system. If you are selected, you can profi le your business free of charge. NZTE hosts the system and you are responsible for keeping it accurate and updated.

SEE TEMPLATE 10D (Website improvements)

SEE TEMPLATE 10E (Online directories)

SEE TEMPLATE 10F (Industry websites)

SEE TEMPLATE 10G (Target publications)

SEE TEMPLATE 10H (Target companies)



45

If you are aiming to target particular companies, consider using direct mail to send out a tailored package and samples to them which you can follow up with a sales call. If you are short of leads, try cold calling selected companies to identify the decision maker or relevant person for a direct mail letter.

Market visitsDespite the power of the internet, arguably the most effective way to understand people and do business with them is still to meet them face-to-face.Business practices and cultural customs vary from country to country. To make a good impression and avoid the risk of offending people, always research the cultural norms and accepted business practices before you leave home. If English is not the fi rst language in the country you are visiting, consider learning some simple greetings and hiring an interpreter. If NZTE has an offi ce in the target country it may be able to assist you. Keep your overall objectives in mind when planning your trip. Make the most of your time in the market by planning your itinerary and organising some appointments from New Zealand beforehand.

ReferralsEven though you may be new to a particular market, you may have suppliers, clients or other business contacts who already export there. If so, ask if they would be willing to introduce you to their contacts, or to others who may be able to assist you with referrals.

Trade fairs Some international fairs have immense importance as industry or sector gatherings. They can be important for identifying trends, and for major launches or order confi rmations.

Research any trade fairs carefully before visiting or committing to exhibit. Find out who visits, who exhibits, how representative the fair is of the market, and how it is rated by other participants. Then refer back to your overall aims and select the fair that best suits your promotional objective.

It is also useful to discuss potential attendance at shows with your contacts in the market and with NZTE. There may be others wanting to collaborate with you or, if exhibiting, you may be able to book space in a New Zealand branded pavilion.

Conferences 10I

Conferences can be an effective way to meet potential suppliers, distributors or clients. As with trade fairs, do your research before sending away your registration. Check who the keynote speakers are and, if possible, where the delegates will be coming from.

Search online for conferences by industry or country, or visit conference directories such as www.allconferences.com for any suitable opportunities.

In-market promotions In-market promotions allow potential customers to see a product in use, and even try it out for themselves. Such promotions may draw on point-of-sale material, sampling or tasting, competitions or other activities linked by some action or advertising.

Seek the advice of your agent or distributor on appropriate and effective promotional tools.

Advertising and PRIt is important to understand the sort of advertising or promotion most likely to work for your product or service in the local market when developing your plan. An advertising campaign that is well received in New Zealand may not work overseas.

NEED A LOCAL MARKET PRESENCE?

NZTE’s Beachheads Programme is designed to assist high growth potential companies. It provides services to accelerate market entry and international business growth, linking New Zealand companies into global connections and supporting them to establish and expand offshore operations.

Places on the programme are limited and businesses must meet certain criteria to qualify. For more information visit www.nzte.govt.nz/beachheads or call 0800 555 888.

TRADE FAIRS WORKSHOP

The ’Trade Fairs – Critical Success Factors’ workshop run by the Exporter Education Programme also provides a good understanding of critical success factors and a checklist for planning the event. Visit www.exported.co.nz for more information.

MEETINGS

Be on time and respect the allocated meeting time. If you are using an interpreter, allow double the amount of time when scheduling your meeting.

SEE TEMPLATE 10I (Suitable events)



46

If you have the budget, appointing a public relations or other media partner in your market is often worthwhile. Check that your prospective partners have good media contacts. If advertising is central to your promotion strategy, they should also have a media strategy. Before entering into any agreement ask to see a portfolio of the work or campaigns the agency has achieved for other clients.

Build your campaign to meet your promotional objectives. For example you may need material for trade events, awards and conferences, or you may be launching a specifi c product and need professional assistance to gain press coverage.

You will also need to consider where you will produce any marketing collateral. If you plan to print overseas, you may save money but have less infl uence over quality control. If you plan to print your material in New Zealand, you will have greater quality control, but also shipping costs to add to your budget.

5. Set timelines and budgetSet timelines to ensure programme deadlines are met.

Ensure you recover the costs or generate a worthwhile profi t from your efforts. If the budget required turns out to be higher than you anticipated, review your overall aims and revise your plan accordingly. Identify the opportunities that will give you the best value for your dollar, or alternatively, look to extend your promotion timeline.

Example

Promotional Timeline$ Jan $ Feb $ Mar $ Apr $ May $ Jun

Website translation 2,000 200 200

Direct mail new products 300 300 700

Market visit 9,000

Trade fair 10,000

Ad campaign 20,000 5,000

Total cost each month $ 2,000 $ 9,000 $ 500 $ 20,300 $ 10,200 $ 5,700

6. Implement programmeOnce you have decided which tactics to use, it is important to assign responsibility for each task to ensure that they are implemented.

Remember that if you need to travel to the target market, you may need to delegate the responsibility of running your business back in New Zealand while you are away. Be sure to factor this into your promotion plan.

7. Evaluate resultsYour promotion plan is a living document designed to get results so review it regularly to keep it relevant. If possible, favour tactics that you can measure so you can evaluate the return on your investment. Setting quantifi able or measurable objectives alongside each promotional tactic will also make this process more straightforward. For example, assess how many sales you generated from a trade fair, special sales events, or count the number of replies from any email/direct mail campaigns.

In summary 10J

Building a simple, practical promotion plan helps you focus your efforts to achieve greater, more measurable results. Clearly identify your aims, targets and objectives and use a range of specifi c, well-considered tactics to build your market presence. This approach gives you the means to assess and improve your marketing performance in subsequent years.

TRANSLATION

Whichever forms of promotion you decide to use, you will need to consider whether your material needs translating.

CHECK FOR SEASONAL EVENTS WHEN PLANNING

Remember to check for holidays, festivals and other seasonal events when putting your timeline together. The NZTE Country Guides at www.marketnewzealand.com or websites such as www.earthcalendar.net offer country information, signifi cant dates and events.

BE CONSISTENT WITH YOUR BRANDING

Your business promotion must be consistent with your overall branding. Check that the message you wish to communicate to your customer is supported by your advertising, packaging, general promotional and point-of-sale material, public relations, direct mail, telemarketing, multimedia CD-ROM, website, and overall customer service.

SEE TEMPLATE 10J (Promotional plan)


STEP 11: PITCHING YOUR BUSINESS

47

At the heart of every successful business is often someone skilled at communicating their ideas and business. If you can tell your business story effectively when the opportunity arises, you have a far better chance of success.

Pitching can happen at any stage after you contact a customer – from an email you might send, a phone call, a chance meeting at an event. Even your website should be a subtle pitch for your business as the customer will most likely study it before agreeing to see you.

If you sell to other businesses then you (or someone in your business) will have to meet with them at some stage. Even if you intend to sell via agents or distributors, or license your product or service, you will still need to pitch your business.

Research your targets 11A

Each pitch needs to be carefully thought out and preferably tailored for the person or people you will be speaking to. The more you can prepare the better.

To pitch for work successfully, fi rst research the business you are approaching:

• get hold of their brochures, fl yers and catalogues

• read their Annual Report – it can help you to understand their goals and future direction

• search the internet as well as their website to fi nd more information on them.

Customise your pitchIf possible (depending on your product or service), try to present as if the customer already owns the product or service you are offering – such as using their logos, mocking up product in their packaging or showing photos and images of what the product or service would look like once they have bought it.

One New Zealand company sold a product successfully in the United States by building a complete prototype based on a successful New Zealand model but customising it for the American client. By the time they came to pitch everything had been altered or adapted (even the text conformed to American usage and spelling). They got the work.

Identify pain points and goalsAn effective pitch directly addresses a customer’s pain point. For example, the customer may have a serious bottleneck in their production line that your software programme can solve.

As you start forming a relationship with a customer, try to fi nd out what their pain points are. You can ask them directly, or you can listen carefully to what they say. Often the pain point will emerge from what the customer says, or you may have to ‘read between the lines’.

Listening carefully is a prime hallmark of effective sellingAlso ask the person you deal with what their goals are – if they work for a large company then they will have some benchmark goals they need to achieve. If you know what is important to them, it is easier to address the goals in your presentation.

Time your pitch Timing your presentation can be crucial to success. Try to fi nd out the company’s budget time frames and when they make decisions. For example, if their fi nancial year ends in June, they may only make decisions for the next year from the beginning of July when they have access to the new budget. If you pitch too early, they may not be listening.

Alternatively, some companies have surplus funds left over towards the end of their fi nancial year. Departments may have to spend these funds before the year end or risk losing them in the next budget round.

IMPLEMENT YOUR STRATEGYSTEP 11: PITCHING YOUR BUSINESS

SEE TEMPLATE 11A (Target companies)



48

Offer credible solutions 11B

All good pitches offer credible and cost-effective solutions to challenges faced by the business they are presenting to.

Always explain the benefi ts you offer from the customer’s point of view. If possible, show them in cash terms how your product or service will:

• increase their effi ciency

• lower their costs

• raise productivity

• improve their profi tability

• allow them to deliver a better service to their customers, their staff or other stakeholders.

Project your point of differenceOne critical issue that any company will want to know the answer to is ‘Why are you and your business better than anyone else?’ Rephrased, the question is essentially: ‘Why should we do business with you?’

Make sure you address this fully when you present. You will have to be pretty convincing and have some specifi c points of difference and competitive advantages.

Build your credibilityIt is important to include credibility details in your pitch and any supporting brochures or documentation. The purpose is to build confi dence in your business as a supplier and reduce the risk they might feel in doing business with you. For example:

• export track record and achievements in your industry

• details of other projects you’ve successfully completed

• customer feedback

• quality standards and awards

• experience of yourself and staff

• guarantees you offer.

Sources you might refer them to for more credibility details include your company brochure or fl yers, your website and the handout notes that accompany your presentation.

Write a one-page briefFinally, boil down all the points you’ve made into a one-page brief that gives the company you are pitching to a succinct summary they can refer to.

This may sound easy, but often writing one page on exactly what you do and what you need, is harder than writing 10 pages. Carefully select what you will include. Write a few pages and then slice it back. It’s important you can clearly communicate the key opportunity your company offers.

Training and helpAs you usually have only one chance to present, you need to make sure your presentation is professional and polished (including presenting your ideas, sketch boards, CDs, website demos, etc.). If you lack experience in pitching, consider getting some professional help. All this may cost you a few thousand dollars, but consider how much the business you’re after will be worth to you.

SEE TEMPLATE 11B (Challenges and solutions)



49

You may need help or training to:

• develop an effective presentation with supporting material

• negotiate contracts

• make and close the sale.

Developing an effective presentationMost presentations have three elements:1. your speech2. the accompanying presentation (such as a PowerPoint slide show)3. handout notes.

To make an impression and get your message across quickly and clearly, use a step-by-step approach. Start with the problem, outline your solution and supporting research, give evidence of your credibility, outline pricing (if necessary), then explain what happens next.

If you are going to use PowerPoint (or something similar) remember that slides with a lot of text distract your audience. Make the presentation a guideline for your speech and use the handouts to give more detail.

Your slides are intended as a support for your presentation. They should not become the whole presentation with you reading each one to the audience. Short, sharp bullet points are useful prompt for you as speaker, leaving you free to elaborate and discuss each point with your audience.

Some further tips:• Keep the presentation as short as is feasible. Six to 10 is a good number of slides to keep

your message simple and hold audience interest.• Maintain eye contact with your audience. This will keep their attention and give your

presentation more impact and give you more credibility.• Show a picture or graphic early. It can capture the audience’s attention and be a powerful

visual reference for whatever you are talking about.• Have samples of your product on hand where appropriate.

If you are going to use PowerPoint (or something similar) then make sure you:• know how to use a data show projector and how to cure a ‘blue screen of death’• have a Plan B if the equipment fails• check the room for suitability, plugs and local voltage rate.

Tell a storyTelling a story linked to your topic or the story of your company can be a powerful way of communicating your message. Don’t forget to use your New Zealand base if that is important. We have a lot to offer the rest of the world – and being in a different time zone has its advantages.

Many successful exporters have used powerful New Zealand based stories. For example, Icebreaker (www.icebreaker.com) tells a compelling story about the virtues of New Zealand pure merino wool transformed into fashionable but highly practical and effi cient garments.

Decide who will presentThe ability to speak confi dently and fl uently to others is an important business skill that will serve you well throughout your business life. If you’re nervous or not accomplished at speaking or presenting, either get some training in effective communication, or appoint someone suitable from your staff to be the spokesperson.



50

Make sure whoever speaks for your business is confi dent, can outline the main aspects clearly and does not get side tracked. They need to bare their heart and soul in the presentation, so the passion shows through.

Practice your skillsYou can practice speaking and pitching by approaching some New Zealand organisations. For example: business schools in universities; community groups such as Zonta, Rotary or Lions Clubs; chambers of commerce or industry associations.

The point here is not to offer a ‘hard sell’ on your products or services, but to practice your skills at speaking to larger audiences. The topic might be something broader, such as developments in your industry or the impact of new technology.

Speaking at conferences is another great way to build credibility and boost your confi dence. The possibility of speaking to larger groups than just the half dozen people in the usual pitch situation can open up bigger opportunities.

For example, suppose you sell products to dentists. Imagine the opportunity if you could speak at the British or American Dental Association’s next conference. It might be about an industry topic, but you would gain exposure to hundreds of potential customers.

It may take some time, but getting to speak or present to larger groups of potential customers could save a fortune in marketing costs. Search for conferences in your fi eld and contact the organisers for the chance to speak.

Develop a verbal elevator pitch 11C

A great help is to develop an ‘elevator pitch’ for your company. This is the pitch you would make verbally about your company if you were sharing a 30-second lift ride with the CEO of the company you are targeting. In these 30 seconds, you have to convince the CEO you are worth talking to.

The elevator pitch is a very useful exercise in concentrating your mind on the essence of your business and will give you the confi dence to speak about your business to anyone at any time.

Delivering your pitch When you deliver your actual pitch, try to achieve three things:

1. Make it sound and look as if they are the only business you are pitching to. Present your idea and competitive advantage clearly and relate them wherever possible to the aims and goals of the company you’re facing.

2. Get them involved in the presentation. The more talking they do about their issues and the challenges they’re looking to solve, and the more carefully you listen, the more favourable their impression of you is likely to be.

3. Listen and adjust: make sure you can adjust your presentation immediately based on what they say. The more fl exible and quick-witted you can be in this regard, the better your presentation will come across.

Be prepared to modify portions, or leave out non-relevant sections to more closely match their needs and expectations.

KEEP IT SIMPLE

Especially if you’re presenting overseas, keep it as simple as possible. Cover no more than fi ve key points in the whole presentation (preferably no more than three key points) and repeat these main points in your closing summary.

DEVELOP YOUR PUBLIC SPEAKING SKILLS

If you want to develop your public speaking skills, join a professional speaking organisation such as Toast Masters (www.toastmasters.org.nz) or Dale Carnegie (www.dalecarnegie.co.nz). These organisations will give you the opportunity to practise your speaking skills in front of a supportive audience.

SEE TEMPLATE 11C (Your elevator pitch)



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No need to fi nish the presentation if you don’t have toA New Zealand company spent about 40 hours preparing for a pitch, including demos and advice. They had arranged a 60 minute presentation with a potential customer in London, but after 20 minutes the customer was convinced and agreed to take a trial order – although the presentation wasn’t fi nished.

The temptation is to keep going, but in a case like this you need to stop and forget about all the other material you have prepared – the presentation has served its purpose.

Cultural factorsCultural factors are always involved in successful sales pitches and contract negotiations. You also need to take account of the personalities of individuals or groups you are trying to infl uence. You may need to identify the decision-maker amongst a negotiating group, and in some cultures this may not always be obvious. You may also need to fi nd out at what level within a large organisation the purchase decision is made.

Negotiating and overcoming objectionsTry to think in advance of the key objections customers are likely to raise and the reassurance or solutions you can offer. Involve your staff and your advisors in this exercise. It can be useful to imagine what a potential customer might ask.

• Why should we use a non-local company?

• Will the product work in our climate, electrical systems or other local conditions?

• Does the product meet all our industry, health and safety regulations?

• Will we be able to talk to them on a regular basis?

• What if something goes wrong – who do we talk to?

• We have to set up a new supplier number.

• It might take too long to get any spares/supplies/replies/additional product/service.

• They are not registered for our tax laws.

• We might upset our customers if they know we are using a foreign company where a local supplier exists.

Identify and address all the possible objections/issues. If you can offer positive solutions you can overcome objections before they become deal killers.

If you are:

• Pitching a product, emphasise continuity, local maintenance/back up, and stress features that save money/time. Focus on your unique difference.

• Pitching a service, then the people aspect is more crucial. Outline how you will keep in touch through regular visits and/or local alliances on the ground. Remember the more credibility and the better track record you have, the easier it is to pitch, so quote other large companies you have worked with, or work you have done.

Negotiations can take months or even years, so start prospecting early – it will take you longer than you think. Larger companies can often take some time to make decisions as the process has to move through layers or management.

In the meantime continue to develop your personal relationship with overseas customers. Visit them when you can, turn up to events or conferences/trade shows where they meet you. The more you can see them in different settings the better.

Break bread with them at a lunch or dinner and pay the bill. Do all the normal things you would expect to do for New Zealand clients – but as you are based in New Zealand you just need a little more planning. These costs must be budgeted into the cost of doing business overseas.

CULTURAL FACTORS

Ensure you take local customs, culture and protocols into account when you deliver your pitch. Even the colour of your slides and other promotional material might need to be changed. Visit www.marketnewzealand.com for helpful country briefs.

FREQUENTLY ASKED QUESTIONS SHEET

Consider a ‘Frequently Asked Question’ sheet which addresses all the potential concerns a company may have before they can raise them (such as dealing with a company from New Zealand).



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Closing the saleIf your presentation was not aimed at a sale, then ask for a ‘next steps’ or some action point to take you to the next stage. Alternatively, propose the next step yourself (“I will ring you in a week”) if this is appropriate and then assess their reaction.

Making the actual sale often comes down to your ability to negotiate. You are likely to gain the edge over other suppliers based on your knowledge of the market and potential clients, and the ability to deliver what they expect, rather than just fi nding a lucky opportunity. Customers have an increasingly wide choice of products from many sources.

If they say no to a sale, politely ask them why – it won’t do you any harm to fi nd out.

Price is an important consideration – it may sometimes appear the only consideration – but in key markets for specialised products and services the fi nal buying decision will depend on a range of factors. These include:

• appropriateness of the product

• knowing your point of difference – what sets you apart from the competition

• your ability to relate to the buyer

• your willingness to adapt your product or your delivery to the client’s needs

• how committed you appear to be

• your history in the market or, for new exporters, your experiences in your domestic market

• other people recommending your product to customers

• who else you deal with

• your ability to provide back-up in the market

• what the buyer knows or believes about other New Zealand suppliers of similar products, or even other products

• your professionalism.

Summary• Research customers thoroughly to prepare your pitch.

• Make sure you understand their needs.

• Get help and training if necessary to present effectively.

• Prepare well to answer direct questions and back up your response with evidence.

• Prepare positive solutions for common objections.

• Describe your competitive edge and product or service benefi ts concisely and persuasively.

• Explain the benefi ts your product or service and how they address the customer’s pain points. Put a money value on the benefi ts if possible.

DEVELOP YOUR SALES PITCH

The Exporter Education Programme includes a workshop on Developing Your Winning Sales Pitch. It will help you to develop your sales pitch and sharpen your negotiation skills. These are both key elements in winning export business. Visit www.exported.co.nz for more information.


STEP 12: FOLLOWING UP

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Plan your follow-up in advanceNew exporters often think their major task has been accomplished when they have identifi ed willing customers and made the fi rst contact–or even signed the fi rst contract. In fact this is just the beginning.

It is important to protect your time, effort and money investment through a planned follow-up campaign. Many potential export opportunities have died an unnecessary death through lack of a simple follow-up schedule.

From the overseas customer’s point of view, it can be something of a surprise (or even a novelty) to meet someone from as far away as New Zealand. But while the fact that you have travelled so far can impress them enough to give you a fi rst interview and reply to your emails, our remoteness from major markets can make it just as easy for them to forget you once you have walked out of their offi ce.

Distance also puts you at a distinct disadvantage compared to closer competitors. For example, a competitor located anywhere in Europe can take advantage of cheap local fl ights to service European customers, whereas the fl ight from New Zealand is both time consuming and comparatively expensive and therefore must be carefully planned.

This makes it imperative to develop a planned follow-up campaign and implement the plan systematically.

Follow-up might include:

• a mixture of phone calls and emails (phone calls are better at deepening the ‘human connection’ in a relationship)

• specifi c follow-up on your last meeting, pitch or presentation

• visits to the market

• sending catalogues fl yers, and the latest material

• attending trade fairs or conferences.

Stay in the driver’s seatIt is important never to leave a meeting or presentation without clarifying the next step. For example:

• “Thank you for listening. I would like to send you some more information within the next week. I will contact you afterwards to see if there is anything else you need to know.”

• “I will get a quote to you in the next three days.”

• “What is the next step from here?” If the customer undertakes to get back to you, ask when you can expect a reply and note this in your diary while the customer watches. You can then add. “Thanks. That’s fi ne. I’ll be in contact with you around then.” The customer then knows to expect a call.

If you leave the initiative to the customer, there is less chance of developing the relationship. However interested in your products or service the customer might be, hundreds of other things over the following days are likely to distract their attention and cause them to forget your details.

Adapt and reviewThe most critical aspects of follow-up are keeping in contact with the market and being ready to adapt to the future or changing markets.

Part of dealing with the future will be recognising a successful formula you can transfer from one market to a new one. But you will also need new ideas and new strategies. This means reviewing, updating or generating new plans for future exporting activity.

IMPLEMENT YOUR STRATEGYSTEP 12: FOLLOWING UP

GET A LOCAL REPRESENTATIVE TO FOLLOW UP

A local representative ‘on the ground’ in the target market can make a critical difference when it comes to following up a sales lead. A person from the same culture and speaking the same language can help to reassure local customers. It can even be important in markets such as Australia, Britain or the United States that may superfi cially seem very similar to New Zealand.

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You need to anticipate:

• the way the market and orders are likely to grow

• what else is changing

• what might go wrong and how you will put it right.

You need to be aware of new opportunities and new markets, and look at the longer-term implications of how markets are growing, and what new products are going to be required.

Visit the marketPersonal relationships are fostered face to face, nothing replaces this sort of contact or gives you a better understanding of how your product will compete and how best to position it. Visits to the market are also an opportunity to inform and train key staff to perform better and to invite distributors or key clients to New Zealand.

Customer relationshipsContinue to increase their knowledge of your products and services. For example, send them:

• examples or links to articles of how your products have solved similar pain points for other customers (put a money value on this if you can)

• any media coverage you have received

• newsletters, product information leafl ets or brochures

• information about new product development

• links to, or copies of relevant industry articles or information that could be of value to them.

It will help in this regard to keep your website up-to-date with the latest customer feedback and evidence of projects completed.

Agent or distributor relationshipsYou will also need to review agent and distributor performance. You can only do this honestly and effectively if you maintain regular personal contact with them and if you both agree on sales targets. Send them the same information you send to clients. For example, stories of how your product or service has solved customer challenges elsewhere will make it easier for agents or distributors to make sales.

Encourage open discussions about why targets were not met. Perhaps you need to offer more training, or better marketing collateral. You may need to price the product differently or target different customers.

Discuss the on-going training needs of your agent or distributor and the training needs of their clients. Perhaps your agent or distributor should be brought to New Zealand to learn more about your product or service.

The time factorIt is unrealistic to go overseas and expect an export order in the fi rst week. It can take years to crack an export market and it will almost certainly take longer than you think, so build this time factor into your export budget.

Export is a medium to long-term commitment in terms of resources, time, and effort, especially in different cultures. You need persistence, determination and continued enthusiasm despite possible setbacks – even major ones that may mean withdrawing from a particular market.



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Finally…Get your staff motivated to provide excellent customer service by keeping them in touch with your export programme and all the places where your product is sold internationally. Let them know how they are contributing to an international business.

As in any business venture the most important people to your company remain your customers. It should be company policy to keep them happy wherever they are. Prove yourself a reliable company and this may be more effective in helping them build up your export business than anything else.

Where to next?Consider attending the NZTE Exporter Education Programme which is designed to provide exporters with the skills and advice to help them grow exports. The programme attracts both those new to export and experienced exporters looking to get more strategic, skilled and focused in their approach.

The Exporter Education service offers an optional one-on-one export assessment. This helps us determine which courses are most suited to your needs. Visit www.exported.co.nz for details of upcoming export workshops.

Good luck!


New Zealand Trade and EnterpriseNew Zealand Trade and Enterprise (NZTE) is the government’s national economic development agency. We work to stimulate economic growth by helping to boost export earnings, strengthening regional economies, and delivering economic development assistance to industries and individual businesses. As a global organisation, we use our knowledge and contacts in overseas markets to connect New Zealand businesses with trade and investment opportunities.

Our strategic goals are to:

• increase the international connections of New Zealand business

• help businesses build their capability

• improve the environment for enterprise and growth.

We focus on industries and sectors where New Zealand has a long-term competitive advantage in world markets, and on businesses with high-growth potential.

Our services and programmes can be used by companies from start ups to established exporters. They include providing advice, training, mentoring, funding, and business and market development assistance.

Some services are provided directly by NZTE and others are provided through external organisations – such as regional business development organisations and expert advisors - funded by NZTE.

NZTE staff based overseas provide hands-on assistance to New Zealand exporters. Our unique blend of government and business skills enables us to open doors to infl uential contacts in the public and private sectors. We promote New Zealand and its capabilities to potential customers and investors under the international brand New Zealand New Thinking. This brand positions New Zealand business as creative, innovative and technologically advanced.

We also provide local buyers, importers and distributors with information on what New Zealand business has to offer, to help them source quality New Zealand products and services or identify investment opportunities.

Our regional offi ces in New Zealand work closely with local government, regional economic development agencies and other regional allies to help grow regional economies.

Together we encourage New Zealanders to value entrepreneurship, celebrate business success and better understand the connection between economic growth and affording the living standards to which New Zealanders aspire.

To fi nd out more about NZTE’s services and programmes please call the business services team on 0800 555 888 or visit www.nzte.govt.nz

Exporter EducationWhether you are an existing exporter or new to exporting www.exported.co.nz provides a number of useful exporting tools including details of the Exporter Education programme. The programme is a comprehensive service for exporters providing:

• exporter needs assessment

• workshops

• small group training

• post-workshop coaching

• online resources and training modules.

BUSINESS RESOURCES

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BUSINESS RESOURCES

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Exporter needs assessmentThe fi rst step in the Exporter Education programme is a one-on-one session to assess your export capability, your particular training and advisory needs, and develop a plan to help you acquire the necessary skills and knowledge.

WorkshopsExporter Education workshops are delivered by specialists and cover the following topics:

• International Marketing – including strategic market selection, market research, intellectual property protection, pricing and marketing

• Winning Market Entry Strategies and Effective Partner Relationships

• Market Research – a how to guide

• Tax Issues for Exporters

• International Sales and Negotiation

• Exporting Online

• Effective Tendering and Proposal Writing

• Critical Success Factors for Trade Fairs

• Country specifi c exporting workshops e.g. Exporting to the United States.

Post-workshop coachingAfter attending a workshop, one-on-one post-workshop coaching is available to all participants. This follow-up helps you to commit to action plans and get any extra guidance required to implement your export growth strategy.

You can register for the Exporter Education programme online at www.exported.co.nz or you can phone 0800 232 800 to be sent a registration form. Details of workshops in your area are listed on the website.

Escalator serviceSupported by NZTE, the Escalator service helps qualifying New Zealand businesses get investment-ready. Principally, and depending on the level of support applicable to each qualifying business, the Escalator service offers assessment and advice on investment readiness for a business or entrepreneurial opportunity, plus deal preparation and deal broking. It also offers investment specifi c workshops. For further information contact the client services team on phone 0800 822 748 or visit www.escalator.co.nz

Enterprise TrainingNZTE’s fully funded Enterprise Training Programme (ETP) is aimed at upskilling the owners and operators of small and medium-sized enterprises (SMEs) to help them to develop and grow their businesses. ETP is delivered throughout New Zealand by specialist training providers and offers a range of different workshops complemented by post-workshop coaching designed to enable participants to implement what was learnt. For more information visit www.nzte.govt.nz/enterprisetraining

biz serviceThe biz service is a free specialist business information and referral service for small to medium businesses (SMEs). The service will help you identify organisations, people, training programmes and resources to help develop your business, as well as contacts and information on government and non-government services. You can contact the biz service on 0800 424 946.


BUSINESS RESOURCES

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Project LinkProject Link provides qualifi ed leads for business opportunities in selected offshore markets for the engineering, marine and building and construction industries. Leads are supplied via its online subscription service. For more information about subscription fees and other details visit www.projectlink.govt.nz

Industry Capability Network (ICN)Industry Capability Network works with New Zealand and Australian private and state owned enterprise, government departments and bodies to identify major project opportunities that can be completed using competitive local supply. For more information visit www.icn.govt.nz

Useful websiteswww.marketnewzealand.com

This website, run by NZTE, offers a wide range of information. You can register to profi le your products and services and access news and global market intelligence, or get help from the business services team on 0800 555 888.

www.customs.govt.nz/exporters/default.asp

Provides assistance to ensure exporters meet customs requirements and includes an FAQs (Frequently Asked Questions) section or call 0800 428 786.

www.exportnewzealand.org.nz

Export New Zealand’s website provides details of the expanding network of companies building a shared knowledge base of exporters nationwide.

www.business.govt.nz

The New Zealand Government business website provides a range of tools and information specifi cally designed for small and medium sized businesses. Information is provided on topics such as e-business, fi nance, marketing, New Zealand business regulations and much more.

Free publications from New Zealand Trade and EnterpriseFree publications produced by NZTE can be ordered by phoning 0800 555 888.

Growing your Business: services for small to medium enterprises. A guide to services and programmes specifi cally tailored towards small and medium sized enterprises at different stages of the business life cycle.

Foundations for Growth: A New Zealand Guide to Business Improvement. This book outlines key ways you can improve your business and explains the benefi ts of doing this. It also provides tips for where to turn to for help (information, funding or advice) in heading down the business improvement path.

Planning for Success: Helping you develop your own business plan. The book offers comprehensive details of what should go into a good business plan and includes templates that will help you build a complete picture of your business and where it’s heading.

Other resourcesChambers of CommerceChambers of Commerce and Industry offer valuable help to members and also allow you to network with and meet both local and overseas fellow business people. Visit www.nzchambers.co.nz for details of your nearest Chamber of Commerce.

Industry or professional associationsInvestigate joining your specifi c industry or professional association. Search online or visit www.business.govt.nz for details of industry associations.


BUSINESS RESOURCES

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New Zealand Institute of Management (NZIM)The New Zealand Institute of Management offers a large range of business information, training, skills and networks that can assist members in building a competitive advantage for themselves and their organisation. Visit www.nzim.co.nz for more information.

NetworksJoin business networks to extend your business contacts and build your business skills. Contact your local Economic Development Agency for information about the various business networks operating in your area. To get details of your nearest Economic Development Agency visit www.edanz.org.nz or email (04) 978 1291.

Business Mentors New ZealandIf you employ less than 25 people and your business is more than 12 months old, you can apply for a business mentor through Business Mentors New Zealand.

These mentors are experienced and successful business people who are willing to share their expertise with you to help you and your business grow. Visit www.businessmentor.org.nz or phone 0800 103 400 for more information.

Connect New ZealandConnect New Zealand fast tracks young, innovative technology companies with high growth potential. Connect’s roundtable process provides companies with input on strategic issues from successful entrepreneurs, investors and professional advisors. Workshops and briefi ngs facilitate knowledge transfer and build networks within the science, research, technology and business communities. For more information visit www.connectnewzealand.com

Poutama TrustIf you are a Maori organisation or individual, Poutama can help your business with funding and advice through a range of services. For more information visit www.poutama.co.nz or call 0800 476 882.

Technology New ZealandTechnology New Zealand (part of the Foundation for Research Science and Technology) provides a comprehensive set of schemes to promote the development and adoption of advanced technologies by business. For more information on business assistance schemes from Technology New Zealand and NZTE, visit www.frst.govt.nz


What are Incoterms?Incoterms are terms used in the import and export industries to describe the responsibilities of the buyer and seller. It is important that you familiarise yourself with the meaning of these terms, so that you clearly understand your rights, obligations and risks as an exporter. Below is a summary of the common terms and their meanings.

It is worth speaking to your freight forwarding agent (and some experienced exporters) to fi nd out which terms might best suit your export business and the types of customers you are dealing with.

CFR: Cost and Freight (to a named port of destination). This term is used in water transport and means that the quoted price includes the cost of the goods plus the freight charges. The exporter (seller) must clear the goods for export and is responsible for all the freight charges necessary to get the goods to the named port of destination. But it is the buyer’s responsibility to insure the goods from the time the goods arrive on board the ship at the port of departure.

CIF: Cost, Insurance and Freight (to a named port of destination). This is similar to CFR except that the exporter must also obtain and pay for the marine insurance against the buyer’s risk of loss or damage to the goods during carriage. The exporter is only required to obtain insurance for minimum coverage. If the goods are being shipped via roll on/roll off water transport then CIP (see below) is a more appropriate term.

CPT: Carriage paid to (a named place of destination). The exporter must clear the goods for export and pay the freight cost to the buyer’s destination. However, the risk of loss or damage is the buyer’s, as well as any costs arising after the exporter has delivered the goods to the carrier.

CIP: Carriage and Insurance Paid To (a named place of destination). This is much the same as CPT but with the addition that the exporter has to purchase insurance against the risk of loss or damage to the goods during carriage.

DAF: Delivered at Frontier (... named place). Here the exporter must clear the goods for export and deliver them to a customs border stipulated in the agreement. This could be the customs border of the originating country or any other border that the seller stipulates.

DDU: Delivered Duty Unpaid (... named place of destination). The exporter accepts the responsibility for delivery to a specifi c destination. The responsibility for payment of duties and taxes must be stipulated in the agreement.

DES: Delivered ex Ship (... named port of destination). Used for sea transport only. The exporter must complete all the formalities up to the point where the ship arrives at its destination port. The buyer must take responsibility from this point and arrange to get the goods off the ship and through customs.

DEQ: Delivered ex Quay (Duty Paid) (... named port of destination). Similar to DES except the agreement includes unloading the goods off the ship and placing them for collection on the quay (port), and clearing them though customs. The documentation must state that duty has been paid.

DDP: Delivered Duty Paid (... named place of destination). The exporter must complete all the paper work and pay all costs to get the goods delivered to the buyer’s destination. This term places the most responsibility on the exporter and the minimum responsibility on the buyer.

EXW (Ex Works). By contrast, this term places the most responsibility on the buyer. The buyer is responsible for organising collection of the goods from the exporter’s premises. This means that the exporter has no legal liability for anything that occurs to the goods after the buyer or a carrier has collected them from the factory or warehouse. This leaves the buyer responsible for ensuring that all the relevant paper work is completed prior to the goods leaving the country. The buyer is also responsible for organising transport to the port, and insurance between the exporter and the port. In most cases it is easier to use FCA (see below) than EXW.

GLOSSARY

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GLOSSARY

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FCA: Free Carrier (... named point). The exporter must clear the goods for export and then hand them over to a carrier named by the buyer. If the buyer asks the exporter to help contract a carrier, then the exporter is acting at the buyer’s risk.

FAS: Free Alongside Ship (... named port of shipment). This term is used only for sea or water transport and means that the exporter is responsible for the goods up until they are deposited alongside the ship. After this point the buyer is responsible for the risk. This term is not appropriate unless the buyer is prepared to be directly involved in carrying out the export formalities.

FOB: Free on Board (... named Port of Shipment). Here the exporter takes full responsibility to get the goods cleared for export and onto a ship (the term can only be used for water transport). The buyer take over the responsibility for insurance and other costs such as freight, etc., from the time the goods arrive on board the ship at the port of departure.


This export assessment guide provides a quick checklist to see if your business is ready to profi t from export. Circle the most appropriate answer. At the end, add up the points next to each answer and insert in the ‘total score’ box.

SELF ASSESSMENT TEST: ARE YOU READY TO EXPORT?

Your company already has a product/service available for exportCurrently in production 10

At prototype stage 2

An idea only 0

The product/service is selling in the New Zealand marketMarket share is growing, market share is high 10

Selling, but market share is low or stagnant 2

Not selling 0

You are selling the product/service in more than one of the three main centres (Auckland, Wellington, Christchurch)Selling in more than three cities 10

Selling in more than one city 5

Selling in only one city 0

You have already achieved export sales for your product/serviceRegular, proactive sales 10

Occasional sales 5

No sales 0

You will be able to increase production by:Using existing capital equipment and staff 10

Training new staff 5

Investing in new plant and equipment 0

Signifi cant fi nance is available for export marketing and product developmentWorking capital/cash fl ow 10

Bank fi nance 5

No fi nance 0

In your business plan you have budgeted for export market development costs (e.g. market research, market visits, samples, brochures and website development)Yes – up to $20,000 10

Yes – up to $10,000 5

No 0

Describe the management of your companyExecutives have experience in export Yes = 10

Management is committed to sustained export efforts Yes = 5Executives have an established track record in meeting deadlines

Yes = 5

Promotional materials such as product/service brochures are availableAvailable 5

Being prepared 3

Nothing prepared 0

The company has calculated FOB (free on board) and CIF (cost, insurance, freight) prices for export productsYes 5

No 0

The company has undertaken research into overseas marketsDetailed research, including visits to the market 5

Desk research 3

No research 0

Total Score

Score higher than 90

Your preparation is highly advanced. NZTE can provide specifi c services to assist your company to take its fi rst professional steps into exporting. A Client Manager experienced in your sector will be happy to make an appointment with you to discuss your needs, phone NZTE on 0800 555 888. Your business may also be eligible to be profi led on MarketNewZealand.com. Visit the website at www.marketnewzealand.com to complete the online application.

Score between 70 and 90

Your preparation is advanced. NZTE can help you prepare your export strategy, contact the business services team on 0800 555 888. Your business may also be eligible to be profi led on MarketNewZealand.com. Visit the website at www.marketnewzealand.com to complete the online application.

Score between 45 and 69

Your company is on the right track, but we recommend more preparation before you start to export. Your business may not be ready to be profi led on MarketNewZealand.com. You may also wish to investigate Exporter Education training by visiting www.exported.co.nz

Score less than 45

You are under-prepared to export at this stage. Your business may not be ready to be profi led on MarketNewZealand.com. You may like to investigate Exporter Education training at www.exported.co.nz


TEMPLATE 1A: GATHERING MARKET INFORMATION

Photocopy this template and complete a copy for each of the targets you are considering

Is the market similar to New Zealand?

Does the target market have similar business practices to New Zealand, and what is the environment like for doing business? (Cover language, culture, politics, etc)

What demand is there for your product/service?

What is the potential market size? What market share do you think you can gain?

Describe your target market. Outline here your specifi c target market(s) or market segments.



Can your target market afford your product? (Record your research on equivalent income levels)

What regulatory or compliance issues could impact on exports of your product? (Cover import regulations, duties or taxes, including compliance and professional registrations if these apply)

How easy will it be to access this market? (Note proximity and freight costs)

What distribution channels for your product/service have you identifi ed?

Will it be profi table to export to this market?



TEMPLATE 1B: RESEARCHING A MARKET IN DEPTH

What similar products exist in the marketplace? And how does your pricing compare?

How do people obtain/use these products?

Who provides them? (Imported from another country, local suppliers, etc)

Is the market for this product or service growing, mature or declining?

What is your point of difference? (Cover your key competitive advantage(s) and selling points for your product)

How will you promote your product or service if there is a lot of competition?



What changes (if any) do you have to make to your product or service for this market ? What packaging changes do you need? (Do you need to change metric measures to imperial, list Ingredients, or translate your packaging?)

Is your existing branding (colours, imagery, logo, etc.) culturally acceptable?

What else is important about your particular product or service?

TEMPLATE 1C: RANKING YOUR TARGET MARKETS

Complete this assessment for each target market.

Target market: (Name) Rank each section 1-10 (10 being best possible potential)

Profi t potentialEase of entry into marketSales potentialSet-up costsPricing comparisonSize and complexity of markets Regulations and compliance issuesReady links with agents and distribution optionsLanguage and cultural barriersTotal score



TEMPLATE 2A: COMPETITOR ASSESSMENT

Photocopy this sheet and complete one for each of your competitors.

Company name:

Try to complete as much of the following information as you can.

1. Is the competitor a local supplier or international exporter?

2. What is their company structure? (SME, multinational, etc)

3. What products/services do they supply?

4. What are their key brands or trade names?

5. Do they sell direct or via an agent or distributor?

6. What is the quality of their product or service?

7. How do they position themselves in the market?

8. How do they promote their product or service?

9. What is their annual turnover? (Estimate if necessary)

10. What is their market share? (Estimate if necessary)



TEMPLATE 2B: COMPETITORS TO VISIT

Which competitors do you want to check out on your market visit?

TEMPLATE 2C: COMPETITOR VISIT ASSESSMENT

NOTE: Photocopy this sheet and use one per company you visit (or phone). Provide a rating for each item on a scale of 1 (poor) to 5 (good).

Date assessed Competitor name

Observations 1 2 3 4 5 Comment/action

1

Outside presentation

Quality of signage, window displays, product display etc.

2

Interior

General tidiness of the business, internal signage, layout of shelving etc.

3

Product

Product quality, range, presentation

4

Pricing

Competitive level of pricing

5

Staff

Friendliness, dress, name badges, product knowledge, speed. Do they approach you?

6

Service

Quality of the service and back-up offered

7

Response time and follow-up

How quickly and adequately did they respond to your phone calls, emails, faxes or letters?

8

Competitive strength

Evaluate the strength of the competitor compared to your business

9

Immediate weaknesses

What gaps or weaknesses can you identify straight away?

10 Other



Month

AprilM

ayJune

JulyAugust

September

Expected $Actual $

Expected $Actual $

Expected $Actual $

Expected $Actual $

Expected $Actual $

Expected $Actual $

RECEIPTS

Sales

Other revenue

(A) Total Receipts

LESS PAYMENTS

Agents comm

issions and fees

Customs and docum

entation

Drawings

Finance costs

Foreign exchange bank fees

Freight

Fuel surcharges

GST payments

Income tax paym

ents

Insurance costs

Loading charges

Manufacturing costs

Sales and marketing costs

Market research

Materials and stock

Other payments

Overheads (rent, power, etc)

Overseas offi ce costs

Packaging

Repayment of loans

Travel and accomm

odation

Wages

Warehousing fees

Wharfage and clearance costs

(B) Total cash payments

(C) NET CASHFLOW

(A-B)

(D) Opening bank balance

Closing bank balance (D+C)

TEMPLATE 3A: EXPORT CASH FLOW FORECAST



Month

OctoberNovem

berDecem

berJanuary

FebruaryM

archExpected $

Actual $Expected $

Actual $Expected $

Actual $Expected $

Actual $Expected $

Actual $Expected $

Actual $RECEIPTS

Sales

Other revenue

(A) Total Receipts

LESS PAYMENTS

Agents comm

issions and fees

Customs and docum

entation

Drawings

Finance costs

Foreign exchange bank fees

Freight

Fuel surcharges

GST payments

Income tax paym

ents

Insurance costs

Loading charges

Manufacturing costs

Sales and marketing costs

Market research

Materials and stock

Other payments

Overheads (rent, power, etc)

Overseas offi ce costs

Packaging

Repayment of loans

Travel and accomm

odation

Wages

Warehousing fees

Wharfage and clearance costs

(B) Total cash payments

(C) NET CASHFLOW

(A-B)

(D) Opening bank balance

Closing bank balance (D+C)


TEMPLATE 3A: EXPORT CASH FLOW FORECAST (CONTINUED)


TEMPLATE 3B: PRICES BASED ON REAL COSTS

Step Item Unit or rate Actual1 Ex-factory – wholesale price (includes your profi t)2 Export packaging (inner and outer)3 Documentation (customs agency/freight forwarder)4 Bank charges (forward exchange, payment arrangements, letters

of credit, bank drafts, hedging, credit insurance)5 Freight to ship or aircraft6 Handling charges and contingencies7 Sub-total Free on board (FOB) NZ$7.1 FOB foreign $8 Marine insurance (sea or air)9 Freight costs 10 Sub-total Cost, insurance and freight (CIF) NZ$10.1 CIF foreign $11 Landing charges12 Customs duties and taxes13 Clearance charges (customs agency / freight forwarding)14 Inland handling and delivery charges15 Contingency (such as fumigation)16 Sub-total Delivered duty paid (DDP) NZ$16.1 DDP foreign $17 Delivered to buyer TOTAL



This all-purpose costing table is particularly useful for comparing prices in the market. You may not need all the steps, and you may need to estimate many of the values used for your calculations. The process can be refi ned as you learn more about the market and distribution of delivery costs.

These mark-ups are only examples. You should always carefully research mark-ups that apply in your target market.

Notes Examples (unit cost)

Estimated mark-ups or unit rates

Your costing

1Retail price $60.00

Retail mark-up e.g. 40%

2aWholesale price $42.86

Wholesale mark-up and/or e.g. 25%

2bDistributor price $34.29

Distributor’s mark-up and/or e.g. 15%

2cAgent’s price $29.82

Agent’s commission e.g. 8%

3

Landed price $27.62

Landing charges Est. 1.5% 0.85

Tariffs/duties (Real rate) $2.65

Customs clearing charges Estimated 0.30

Handling and delivery charges (actual or estimated) Estimated 0.15

4Market currency $23.62

Foreign currency at exchange rate Day’s rate

5Cost, insurance and freight (CIF)NZ$ $33.74

Insurance costs – based on value Estimated 0.35

6Cost and freight (C&F) $33.39

Freight costs Unit rate $5.75

Contingencies Estimated 0.50

7

Free on board (FOB) NZ$ $27.14

Export expense allocation (as per budget) Allowance $1.00

Export packaging Estimated $1.50

Documentation 0.65

Bank charges including collection charges Estimated 0.20

Other fi nance costs (foreign exchange charges) Estimated 0.15

Freight handling (factory to ship or aircraft) $2.20

Trade indemnity insurance, export credit insurance 0.10

8Ex factory cost $21.34

Profi t margin or mark-up $8.00

9

Total factory cost $13.34

Materials $2.80

Direct labour $7.25

Fixed $1.35

Variable overhead costs 0.84

Consumables $1.10

Attend ETP – Pricing and Costing and Budget and Cash fl ow Planning workshops to help you with this important exercise and for useful pricing templates and break-even formulas.

TEMPLATE 3C: EXPORT PRICING WORKBOOK




EXAMPLE: CALCULATING EXPORT BREAK-EVEN POINT

Shipment weight: 100 kg Required margin: 100 % PRODUCTION Per unit Qty Total Cost price ex factory $1.00 1000 $1,000.00 Packaging for retail $1.00 $1,000.00 Packaging for shipping $100.00 $2,100.00 ORIGIN CHARGES Rate Total Handling Minimum: $100.00 Flat rate: $1.10 per kg $110.00 Security Minimum: $50.00 Flat rate: $0.55 per kg $55.00 Export documentation $20.00 per hawb $20.00 Customs entry $20.00 per entry $20.00 Pick up from factory Minimum: $50.00 Flat rate: $1.00 per kg $100.00 $305.00 INTERNATIONAL FREIGHT Rate Total Airport to airport (port to port) Minimum: $300.00 Flat rate: $4.00 per kg $400.00 War risk surcharge Flat rate $0.20 per kg $20.00 Fuel surcharge (if applicable) $0.20 per kg $20.00 $440.00 DESTINATION CHARGES Rate Total Collection fee 4% Minimum: $100.00 $100.00 International terminal fee $20.00 $20.00 Terminal document fee $20.00 $20.00 $140.00 LOCAL DELIVERY CHARGES Rate Total Delivery to warehouse/distributor Minimum: $50.00 Flat rate: $1.00 per kg $100.00 Delivery to retailer/customer $2.00 per unit $2,000.00 $2,100.00

Landed cost per

shipment:$5,085.00

Landed cost per unit:

$5.09

Sell price per unit: $10.17Number unit

sales required to break even:

500


TEMPLATE 3D: CALCULATING EXPORT BREAK-EVEN POINT

Shipment weight: kg Required margin: % PRODUCTION Per unit Qty Total Cost price ex factory $ $ Packaging for retail $ $ Packaging for shipping $ $ ORIGIN CHARGES Rate Total Handling Minimum: $ $ Flat rate: $ per kg $Security Minimum: $ $ Flat rate: $ per kg $Export documentation $ per hawb $Customs entry $ per entry $Pick up from factory Minimum: $ $ Flat rate: $ per kg $ $ INTERNATIONAL FREIGHT Rate Total Airport to airport (port to port) Minimum: $ $ Flat rate: $ per kg $ War risk surcharge Flat rate $ per kg $ Fuel surcharge (if applicable) $ per kg $ $ DESTINATION CHARGES Rate Total Collection fee % Minimum: $ $ International terminal fee $ $ Terminal document fee $ $ $ LOCAL DELIVERY CHARGES Rate Total Delivery to warehouse/distributor Minimum: $ Flat rate: $ per kg $ Delivery to retailer/customer $ per unit $ $

Landed cost per

shipment: $Landed cost per

unit: $Sell price per unit: $

Number unit sales required to

break even: $



TEMPLATE 4A: YOUR DISTRIBUTOR PROFILE

Here are some examples of an ‘ideal’ distributor profi le.

Ideal distributor profi le for a food product:

• an established distributor of food products

• strong sales team in key geographic areas

• can handle all supermarket merchandising (invoicing and returned goods)

• does not carry competing branded products

• reputable and reliable

• fi nancially sound.

Ideal distributor profi le consumer product:

• already distributes consumer products

• has established customer networks in the target (niche) market, e.g. homewares/giftware sector

• markets to specialist homeware/giftware stores and large department stores (critical)

• an established track record

• good reputation in the marketplace

• fi nancially sound

• able to provide marketing and promotional support

• no direct (product) confl ict of interest

• your products complement distributor’s existing product portfolio.

Now enter the required characteristics of your ideal distributor:

Ideal distributor characteristics



TEMPLATE 4B: ASSESSING ENTRY MODELS

Example of assessing advantages and disadvantages of entry models:

Entry model Advantages DisadvantagesIndependent exporting Better control over markets High transport costs

Trade barriersLicensing Low development costs Lack of control over technologyFranchising Low development costs Lack of control over quality

Needs advanced systems and training programme

Joint ventures strategic partnership Access to local partner’s knowledge, resources and skills

Share development costs and risks

Politically acceptable

Possible loss of control over technology

Lack of control over markets and customers

Wholly owned subsidiary Technology protection

Greater effi ciencies and control of market and customers

High costs and risks

List the advantages and disadvantages of each entry method.

Entry model Advantages DisadvantagesIndependent exporting

Licensing

Franchising

Joint ventures strategic partnership

Wholly owned subsidiary

Agent

Distributor

Internet

Other



TEMPLATE 4C: MARKET ENTRY SELECTION TOOL

Example comparing alternative methods of market entry for fruit grading equipment sales to Europe.

Key Evaluation Factors

Direct Sales from NZ Overseas Distributor Contract Manufacturer Joint venture

Delivery times 3 2 1 5

Transport costs 1 1 3 5

Economies of scale 0 0 3 4

Import regulations and compliance

1 2 3 4

Customer access 1 4 0 4

Total scores 6 9 10 22 ✓

1. Identify the key evaluation factors for your situation.

2. Weight each evaluation factor in accordance with your priorities, resources and your notes recorded in Template 4B. Rate each factor on a scale of 1 (poor) to 5 (good).

3. Add up the scores to determine best market entry method(s) for your product or service.

Key Evaluation Factors

Direct sales Distributor Agent Contract manufacturer

Joint venture Internet Franchising Other

Delivery times

Transport costs

Economies of scale

Import regulations and complianceCustomer access

Other

Total scores

Adapted from V. Terpstra, International Marketing, 2nd ed, The Dryden Press, Illinois, 2001.



TEMPLATE 5A: YOUR BUSINESS ADVANTAGE

Outline briefl y what makes your business (not your product or service) special. What are your key advantages over the competition in the market you are targeting? eg. is your business faster, cheaper, better value?

TEMPLATE 5B: YOUR PRODUCT ADVANTAGE

List the advantages of your product or sevice compared to three key competitors. Consider any changes that might make it even more competitive.



TEMPLATE 5C: SWOT ANALYSIS

Strengths (more infl uenced by internal factors and self analysis)

Strengths unique to your business.

Shared strengths (strengths you have – but so do others).

How do you protect, maintain and increase these strengths into a competitive advantage? (Look for uniqueness that is hard to copy.)

Weaknesses (more infl uenced by internal factors and self analysis)

Unique weaknesses (only you have these weaknesses, no one else).

Shared weaknesses (you have these weaknesses – but so do others).

How will you eliminate or reduce the infl uence of these weaknesses?



Opportunities (more infl uenced by external factors and others)

Internal opportunities (short-term and medium-term). Current and future opportunities available in your business that can be captured without replying on others.

External opportunities (short-term and medium-term). Current and future opportunities available in your business that can be captured with reliance on others.

How can you create and leverage off new opportunities?

Threats (more infl uenced by external factors and others)

Internal threats (short-term and medium-term). Current and future threats within your business that can occur without input from others.

External threats (short term and medium term). Current and future threats within your business that might occur with input from others.

What can you do to minimise the impact of future threats?



TEMPLATE 5D: MINIMISING RISKS PERCEIVED BY THE CUSTOMER

Outline the key risks a customer might identify in dealing with your business and then cover the steps you can take to minimise their risk.

Key risks Steps you can take to minimise

TEMPLATE 5E: POSITIONING YOUR BUSINESS

Think about how you are ‘positioned’ compared to key competitors. How can you position away from this competitor to project a unique offer in the marketplace?



TEMPLATE 6A: RISK MANAGEMENT PLAN

Start your risk management plan by creating a simple matrix of potential risks. This is a good way of identifying the probability of risks occurring and the consequences if they did occur.

Grading risks helps you to focus on the critical areas and to mitigate them before they become a crisis. For example, if all your export business is with a single client in Malaysia, and that company becomes insolvent, the outcome could be catastrophic. But if the likelihood of insolvency is low, your risk ranking for that event is more moderate, although still requiring to be monitored.

Risk 1 Risk 2 Risk 3Risk category (e.g. political, cultural, fi nancial, operational)

Description of risk

Probability (low, medium, high)

Consequences

Actions to take to mitigate the risk

How will this be monitored and reviewed?

Affected parties to be communicated with



TEMPLATE 6B: PLAN FOR SUCCESS

Note how you will deal with success.

Factor How you will copeIncrease capability

Increase staff

Train staff

Source alternative suppliers

Finance expansion

Cope with stress of up-scaling

Protect work/life balance

Protect existing customers

Other consequences

TEMPLATE 6C: IP PROTECTION

Record the IP protection you have in place and what you still need to protect.

Current IP Protection:

What additional protection is required?



TEMPLATE 7A: EXPORT STRATEGY

Briefl y describe your export strategy:

How will you achieve your export goals?

(Investors will be interested in how you can scale up your business. If you can demonstrate a convincing scaleable model (preferably expansion into other overseas markets) you can strengthen your investment case).

Explain your distribution channels:

(Cover your chosen distribution options and why these are appropriate for your market).

How will you use the investment funding?

(Investors will want to know how you intend to apply their funds).



TEMPLATE 8A: COMPLIANCE CHECKLIST

Photocopy and complete this sheet for each different product/market.

CountryProduct NZ Tariff number

Tariff barriers

What is the import tariff rate in your intended market?Import value NZ$ % value NZ$

Market tariff rate % Additional tariffs %

Are there any other duties? If yes, note the duty name and rate below.

Product packaging and labelling standards

What product regulations/standards apply?

Are product modifi cations required to meet market standards? If so what will needs to be modifi ed?

Packaging specifi cations

Consider whether the following need to be taken into account when packaging your product:

TickUse of specifi c packaging materials Package size and/or construction methodUse of recyclable or disposable packaging

Perishable requirements

Hazardous goods warning/handling requirements

Any other requirements?



Labelling specifi cations

Do you need to take into account any of the following when labelling your product?

TickProduct name Manufacturer’s name/contact detailsCountry of origin

Materials/ingredients used

Product instructions

Care/storage instructions

Perishable requirements

Hazardous warnings/handling requirements

Bar-code/tracking requirements

Any other requirements?

Export process

Have you considered the following:

Is export insurance required?

What export documentation is required and who will lodge it?

What regulations/legislation must you comply with to trade or employ staff in market?



TEMPLATE 9A: PRODUCT-BASED EXPORT ISSUES

Make notes on what you need and how you intend to cope with or resolve the issues below.

Increase capacity

Extra equipment

Finance requirements

Extra staff

Materials supply

Capacity of existing suppliers

Alternative suppliers

Sustain or increase exporting levels

Maintain quality standards

Service existing customers

Other manufacturing options

Project management system

Other



TEMPLATE 9B: SERVICE-BASED EXPORT ISSUES

Make notes on what you need and how you intend to cope with or resolve the issues below.

Increase capacity

Extra equipment/training/resources

Finance requirements

Extra staff or subcontractors

Working capital required

Sustain or increase exporting levels

Maintain quality standards

Service existing customers

Review pricing strategy

Project management system

Other



TEMPLATE 9C: LOGISTICS ISSUES CHECKLIST

Issue TickFreight options (sea, air, etc)Storage requirementsTransport requirementPackaging details (weight, size, units, pallet)Special requirements on shipment (refrigeration, insulation, etc)Documentation requiredSubmission deadlinesInsuranceCompliance issues in target marketShipper and consignment detailsShipment deadlinesArrival deadlinesSpecial security issuesOther

Additional notes:



TEMPLATE 10A: EXPORT AIM

What is your overall export aim?

TEMPLATE 10B: TARGET MARKET

Defi ne your target market(s) as precisely as you can:(For example, United Kingdom distributors, or United States males 35-50 earning $120,000+)

TEMPLATE 10C: THREE KEY OBJECTIVES

What are your 3 key promotional objectives?1.

2.

3.

TEMPLATE 10D: WEBSITE IMPROVEMENTS

What website improvements can be made for the target market?



TEMPLATE 10E: ONLINE DIRECTORIES

Which online directories could reach your target market?

TEMPLATE 10F: INDUSTRY WEBSITES

List industry websites or portals you could send articles or promotional material.

TEMPLATE 10G: TARGET PUBLICATIONS

List trade publications you could send articles or promotional material to.

TEMPLATE 10H: TARGET COMPANIES

List fi ve companies you could promote to directly.1.2.3.4.

5.



TEMPLATE 10I: SUITABLE EVENTS

List relevant trade fairs or conferences you could attend.

TEMPLATE 10J: PROMOTIONAL PLAN List below the activities or items below that you will use to promote your product or service to target markets. Then enter a budget cost under the scheduled month for the activity.

For example, produce brochures in April, cost $2,000. Direct mail campaign in June, cost $2,500.

Activity Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar TOTAL

TOTAL $



TEMPLATE 11A: TARGET COMPANIES

List three companies you would like to pitch to.1.

2.

3.

Summarise the main purpose of your pitch.

TEMPLATE 11B: CHALLENGES AND SOLUTIONS

List the challenges your target company faces and the solutions you can offer.

Challenges and customer frustrations you can address Solutions you can offer



TEMPLATE 11C: YOUR ELEVATOR PITCH

Sketch out your 30-second elevator pitch.

Now shorten your pitch by a third.



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