Small Business International Trade: Issues to Consider Part 1

international small business

Selling goods and services internationally can expand market opportunities for a small business, but it's not without risks. 

 

Trading across international borders requires preparatory work and a team of professionals with expertise on foreign markets, insurance, the transport and warehousing of products, and methods of payment.

There is a great deal to discuss when it comes to international trade, but as a beginning, I wanted to address seven major points with others to be discussed in our next article.

Here are seven high risk items that need to be considered and addressed:

1. Assess the Marketability of Your Product 

There are famous stories about marketing campaigns in foreign markets run amuck because slogans meaning one thing in American English meant something quite different in the local language.

The best antidote to such miscues is to conduct ahead of time research on country conditions, cultural mores, and local language peculiarities and to speak to the consulate or chamber of commerce associated with the targeted country market to help ascertain the need for the product and how to market it. 

Chambers of Commerce and consulates often employ persons who are experts in trading with the targeted foreign market.

These organizations, and like organizations dedicated to promoting international trade, can be invaluable resources in this area.

2. Consider U.S. Export Laws

While most goods exported from the U.S. are not subject to export restrictions, there are a range of goods that are.

For instance, certain types of computer technologies may be considered to have both military and commercial uses and therefore can become subject to export licensing requirements.

When in doubt as to whether your product may need an export license, the U.S. Department of Commerce should be consulted in connection with the U.S. Export Administration Regulations that govern export licensing.

In addition, consulting with a Freight Forwarder, with expertise in the transport of goods internationally, can also be very instructive.

3. Consider the Targeted Markets Import Laws

The foreign market may also impose import restrictions and/or customs duties that can potentially make selling your product in the foreign market costlier. 

As previously noted, a dialogue with a trade organization like a chamber of commerce or consulate can be extremely helpful in understanding whether and to what extent import laws may affect your efforts to sell product in the targeted foreign market.

4. Understand the Terms of International Trade

In most international contracts of sale, Incoterms are used to define a number of issues pertinent to the transport and delivery of goods, such as when the risk of loss of product passes to the buyer, whether the seller or the buyer is responsible for taking out shipping insurance or responsible for paying export fees or import duties.

Terms like Free Carrier (FCA) and Free on Board (FOB) are terms of international trade art that define many aspects of the relationship between seller and buyer. When framing the manner in which you plan to transport and deliver goods, the 2010 Guide to Incoterms published by the International Chamber of Commerce should be consulted.

Next- Cross business risks 5 to 7 and a takeaway 

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About the author

Robert Goodman

Robert Ian Goodman, Esq. represents clients worldwide in the areas of complex commercial immigration and international and domestic commercial law. Mr. Goodman also provides general counsel services to entrepreneurs and start-up businesses and counsels foreign businesses interested in establishing a presence in the U.S. marketplace and U.S. businesses interested in expanding abroad. Mr. Goodman is principal of Goodman Immigration. He is also Special Counsel to the international boutique law firm, Sharma & DeYoung LLP ("S&D"), where he directs the firm's commercial immigration practice. He also co-chairs that firm's Technology and Emerging Companies Practice Group and is a member of S&D's Commercial Litigation and Arbitration Practice Group. 

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