After 25 years of working with international businesses and 14 years of teaching students how to do global trade, Barrie Reid knows a thing or two (or four) about how to grow a business into foreign markets.

Barrie from New Glasgow, Nova Scotia and tought the FITTskills international business program at the Nova Scotia Community College in Truro. He also delivers global trade presentations and does consulting work for government agencies, World Trade Centers and businesses across the Atlantic Canada region.

“There are four main things that I continually try to instill in the students and companies I work with that will give them the best opportunity for growing their businesses internationally,” he says.

1) Export Readiness: Have a checklist to see if you are ready.

You have to realize that you can’t just choose a country and start doing international business. It’s a strategic decision that your company makes to grow the business. And when you make that decision you have to be sure you have the right building blocks and a strong foundation in place to support your business going international.

Barrie recommends reviewing your company’s export readiness with a well thought-out checklist. Your list should include questions such as:

• Have you formed relationships with qualified freight forwarders?
• Have you researched the business environment in the foreign market, and do you have a bank that can do international currency exchanges and letters of credit for your company?
• Do you have the capacity to fill large orders when the time comes?
• Are you aware of the government agencies that can offer assistance for your industry segment?
• Do you have employees with international business skills, and what additional skills do you need?

“If your company is not export ready, whether it’s related to the key tasks or functions that need to be in place, or it’s your mental attitude toward international business, you’ll struggle to get a foothold in this industry,” he warns.

2) Market Segmentation: Know your customer.

You can’t be everything to everybody. So whether he’s teaching in classrooms or boardrooms, Barrie always goes over the importance of looking at the geography of your company’s potential business, zeroing in on a city or smaller population, and then breaking down all the various opportunities for your product or service.

“Do the research in each market segment to see what the customers want, who the competition is and what the entry barriers are. Then, pick a segment where you have a definite competitive advantage and go in there first. By doing this, there’s a really good chance that you’re going to be successful and get some traction.”

While it may seem like you’re only hitting a narrow portion of your potential market by using this strategy, starting small like this gives you the opportunity to get well-established, and then you can start expanding into other market segments.

3) Market Entry Choice: Make sure to align with the right partner.

Once you’ve found your market and the opportunity that’s right for your business, pick a partner that can really support your entry, be they an agent, distributor, joint venture or can you enter on your own?

“Many companies don’t think this through well enough, and they don’t treat it as a strategic decision,” says Barrie. “They go on a trade mission or they answer an email and they find somebody who tells them all about the connections and opportunities they can provide. So the company grabs this person right off the bat without doing any research, and can easily end up with a partner and a market entry strategy that doesn’t meet their needs.”

So how do you find the best market entry choice for your company?

“A lot of times it’s driven by the type of product or service you offer and the entry barriers,” says Barrie.

For example if you sell frozen seafood products, then you need a partner that can help you secure the proper storage facilities and distribution channels in your target market. If you’re entering a foreign market where you don’t speak the language then a partner fully fluent and well-versed in the cultural nuances of doing business in that market would be ideal. Know your competitive advantage, choose the right market segment and then pick a partner that’s right for you.

4) Closing the Deal: Know how to sell.

You can do everything right in terms of your export readiness, including finding an opportunity, selecting the right market entry choice and planning the logistics, but if you don’t have the selling skills to back it all up then you’ll have a lot of trouble building a successful long-term international business.

In fact, closing the deal is one of the main reasons why a lot of companies don’t have success going international, says Barrie.

“These companies are started by brilliant engineers, accountants, or R&D professionals, but they don’t always have an understanding of how to interact on a one-on-one basis with their foreign customers.”

Cultural awareness and an understanding of how to negotiate and sell in your target market are two things that are hugely important when it comes to closing the deal, along with patience.

“So there’s export readiness, market segmentation, market entry choices and closing the deal,” reiterates Barrie. “If you have these four things in place and if you have a good product that is competitive and in demand, then everything else tends to fall into place.”

Do you agree? Have anything else that you think is important to add to this list?

The post Top 4 Tips to Grow Your Business Internationally appeared first on Trade Ready.

When selecting suppliers, it’s always a good idea to develop a short list of potential candidates and evaluate their services according to established performance criteria.

The supplier that provides the best added value should be selected.

Value provided by a supplier can be measured by a ratio of price and quality. As price increases, quality should increase at a faster rate. These price and quality criteria should be both qualitative and quantitative, and the supplier should be selected for overall fit and not just for price.

Then, perform background checks on companies (of credit and reputation) in order to minimize company risk. Select the supplier that represents the best value-package to your firm. And regardless of how appealing the supplier may be, the manager should always ensure that core competencies remain inside your company, as these are your company’s reasons for being.

The desirable qualities to look for when selecting external suppliers include:

1. A desire to learn about the factors and priorities that affect your business;
2. Efforts to improve service, with the goal of creating a seamless relationship;
3. Depth of knowledge in dealing with your industry (e.g. a customs broker experienced in dealing with perishable goods), or else the experience to anticipate problems before they occur (e.g. an experienced market researcher would know that respondents in certain countries answer questions in the way they think the researcher wants, which obviously skews the results);
4. Investment in technologies and personnel to facilitate the transmission of information, whether it be documentation, research results or market reports;
5. Ability to grow with your company, whether in a large target country, region or globally;
6. Not dealing with your competing products or services: in the case of freight forwarders and logistics firms this may not be such an issue, but it most definitely would be for trading houses, distributors and agents; and
7. Readiness, interest and ability to feedback information on target countries: without such feedback the firm is isolated from its international business.

In the end, supplier selection is a two-way activity and both parties have to be comfortable to make a collaborative relationship work.

The post 7 things to look for when choosing external suppliers appeared first on Trade Ready.

While technology can be helpful in the initial stages of the courtship, be it communicating through email, video conferencing or even the old-fashioned telephone, it’s the addition of the human element that will help you succeed in global trade.

The same holds as true for your new gal as it does with your potential clients or business partners.

Building strong global relationships means wooing with your time

It’s this extra effort and human contact that Alberto fears is becoming less of a given in today’s global business environment with the advancements and ease of technology.

You can write beautiful things, and you can send pictures or videos through email, but in the end, there’s no getting around it. You’ve got to take her out for dinner

Anyone can send a gift card for the best restaurant in the city, but if you’re not there, the value is lost. Taking them for dinner or drinks shows a level of commitment, and it displays that you’re willing to offer them that which is most valuable to you in order to build a strong relationship—your time.

Alberto elaborates, “I don’t think you can form a strong long-lasting relationship without the personal element. People need to see you face-to-face to have that real human connection and to establish a level of trust.”

Technology has its perks in terms of developing global business

Don’t get him wrong though. Alberto obviously uses technology in his everyday business, and sees the incredible value it has brought to his industry in terms of saving businesses time and money.

“I’m really going to date myself, but I think about email,” Alberto admits. “We used to have to send catalogues and binders through the mail with product specifications for our customers. And when I used to travel, I’d have to bring a suitcase filled with binders and catalogues. Nowadays, we don’t do those things. People can look it up on the internet, and we can distribute product information through email to multiple people at the same time.”

Technology has also been great for international trade in terms of research and communications.

“There’s so much information available, and it’s fast and easy to find. We have seen how many transactions can be done over the internet, and how telephone technology has shortened distances. Now we can have a video conference via Skype or GoToMeeting with another person on the other side of the world, and it mean that we don’t even have to be there in front of our customer.”

But in the end there’s this element that we really have to address, and that’s the human element, he says.

“It really makes all the difference.”

The human element helps establish trust on BOTH sides

Perhaps you’re trying to find a local agent to represent you abroad, or maybe a reliable supplier of products or components. You’ve got to go and see what’s going on with your own eyes.

 If I’m here in Canada and I want to import widgets from China because they’re going to be part of a component in my equipment, I’m responsible for the end quality of what I’m going to give to my customers. I have to make sure it’s the right widget and that it’s going to work. This is where it’s important to have that human element.

Not only does Alberto want to see and touch the component he’ll be purchasing, but he also wants to spend some time with the people with whom he’ll be conducting business. You can learn a lot about someone by meeting them in person, he stresses.

Alberto stresses the importance of assessing the situation and the potential when you’re considering if and how much of the human element is necessary for moving ahead with your global business endeavors.

For example, if you’re selling lamps online directly to international customers, you obviously don’t need to meet with each of them to make individual sales. Your customers can search for your product online, and they’ll make the small investment to purchase. They may even buy multiple times over the years and build trust for your product and company, through your consistent service.

However, if you’ll regularly be purchasing and importing hundreds of those lamps from a supplier in Sweden, or if you are hoping to distribute your product in bulk to home décor stores in England, it may be worth your while to build those business connections with personal visits.

When dealing with high-value products or high volumes of products, people need to talk and have that real human-connection in order to establish trust, says Alberto.

The thing that’s going to make you stand out in the crowd

The human element of doing business is almost becoming a differentiator on the global stage. If you’re the type of company that takes time and invests in building strong person-to-person business relationships, people will take notice.

Alberto’s company recently set up a meeting with a potential new client, and gave a presentation on their machinery using Webex. They showed photos and gave a detailed explanation of their product. For all intents and purposes, the presentation went very well. Despite that, they still weren’t closing the deal.

They finally decided the best thing to do would be to just bring the machine to the client so they could meet and see the machinery firsthand.

To be honest, I was against the idea in the beginning because I thought it was going to be a waste of money.

The process would involve exporting the machinery to Mexico, getting it across the border, paying a bond, paying someone to be the importer of record, and getting a warehouse in which to store it once it made it into the country and a truck on which to ship it around.

There were going to be a lot of logistics involved, and a sale in the end wasn’t a given.

“But our customers’ reaction when they saw the machinery was magnificent,” asserts Alberto. “I would do it again in a heartbeat.”

They invited the people who work in management to view the machinery, and also the people who would be doing maintenance so they could see it, ask questions, and get a better understanding of how it could really work for them.

It came to a point where we had to make the effort and we had to make the investment, and it paid off

The pendulum is going to swing back.

Are personal meetings part of your global strategy?

The post Don’t ignore the human element if you want to succeed in global trade appeared first on Trade Ready.

While wooden pallets are cheaper, readily available, more customizable and even recyclable, exporters do face the responsibility of ensuring that while they’re shipping their goods to exciting new markets around the world, they are also avoiding the spread of pests that can cause ecological nightmares!

If the threat of accidentally causing mass deforestation around the globe doesn’t make you nervous, then first of all, shame on you! Secondly, failing to take the steps to ensure your wooden pallets are pest-free can cause disruptions for your supply chain, upset your cross-border customers, and most likely cut a good chunk of green off your bottom line.

So as an exporter, what should you do about it?

Getting the right pallets to ensure smooth cross-border transportation

Like snowflakes or chubby newborn babies, no two wooden pallets are exactly the same. There are created in different lengths and widths, with different numbers of cross boards, and they may be made of hardwood, softwood and in some cases plywood.

But regardless of esthetics and origins, all pallets—as well as other forms of wood packaging, such as crates and cable reels—must be properly treated and certified before they can travel permissibly across international borders.

Heat treatment is the most commonly accepted method of treating wooden pallets.

This involves heating the pallets in kilns to bring the core temperature of the wood to 56 degrees Celsius for at least 30 minutes; sufficient time to kill any pests residing within.

Not only is this option the safest (compared to using chemicals such as methyl bromide), but it also complies with the International Plant Protection Convention’s International Standards for Phytosanitary Measures (ISPM) No. 15. These standards were agreed upon in 2004 by countries around the world looking to form a solution for the global spread of harmful pests.

After being properly treated, pallets can then be certified with an ISPM-15 mark.

“The Canadian government has been monitoring shipments overseas and as long as people are using certified wood packaging, there hasn’t been any problems reported for at least five years here,” says Brian Isard, General Manager of the Canadian Wood Pallet and Container Association (CWPCA).

But the problem is there are exporters who are not using compliant wood packaging certified under the Canadian Wood Packaging Certification Program.

What happens when you don’t use the ISPM-15 certification program?

Uncertified pallets find themselves destined for foreign borders for a number of reasons.

The exporter might be unaware of their responsibility to comply with international phytosanitary regulations and the severe penalties for failing to do so, or uncertified wooden pallets might accidentally find their way into the midst of a shipment that is ISPM-15 certified.

“I saw it happen once a couple of years ago,” says Margaret Duhamel, Import Manager at Icecorp Logistics Inc. “Eight pallets got all the way to Canada from Europe and customs decided to look in the container. Seven pallets were okay but one was not.”

The entire container had to go back because of the one pallet. They wouldn’t let us unload the seven good pallets and destroy the eighth; it all had to go back to origin.

The shipper who sent the pallets had to pay for the return and then also had to pay to get the shipment sent back into Canada. This meant that the purchaser was severely delayed in getting his product.

Of course, there are also cases in which exporters think no one will notice and they can simply use whatever pallets they have in stock. But someone will notice, and the consequences aren’t fun.

“There are also concerns from the U.S. perspective that the application of the mark (ISPM-15) isn’t being properly monitored in countries other than Canada and the US.” says Isard.

While the ISPM-15 mark, or the IPPC stamp, is an international standard with international regulations, the certification programs in place in each country are responsible for guiding and monitoring these standards at registered facilities—including guidelines for the legibility of stamps and where the stamps are applied on the wood packaging.

There are even some concerns in the global marketplace that the marks are being acquired improperly by non-registered suppliers of wood packaging, and are being used improperly, he says.

We haven’t seen evidence that the mark is being abused in Canada, but what we have seen is very strict enforcement at U.S. border points.

“They’ve been increasing the monitoring of imports that use certified wood packaging for stamp legibility, and when imports are identified with unmarked wood packaging other than from Canada, there are restrictions for entry. That should be a concern for international shippers.”

There’s currently a bilateral exemption in place for pallets being shipped back and forth across U.S. and Canadian borders, which means there are no certification requirement for wood packaging. However, both countries recently agreed to phase out the exemption. This means wood packaging moving between the two countries would need to comply with the international standard. While the implementation date for termination of the current bilateral exemption was originally scheduled for 2015, it has been pushed back. Regardless, most in the industry are working based on the assumption that the exemption won’t last much longer.

What will happen to my shipment if I send uncertified pallets?

Like in Margaret’s story, shipments destined for international export that contain uncertified pallets will be held at the border, and you’ll have to replace the pallets in question or have them certified, costing you valuable time and money.

Since ISPM-15 is an international standard, you’ll face issues like this in exporting to any country that’s a signatory to the International Plant Protection Convention.

For example, what would happen if you made a shipment to China and your wood packaging didn’t meet ISPM-15 regulations upon arrival? This could involve ISPM-15 stamps that aren’t applied properly, that customs agents suspect that the wood packaging is not properly certified, or even that they see actual insects on the lumber.

“Typically what happens is the customs agents immediately remove the imported product with the suspect wood-packaging to quarantine, and it becomes a very expensive process for the shipper,” says Isard.

The goods can either be ordered removed and returned to point of origin, or the wood packaging can to be sent for supplementary treatment to the ISPM-15 standard in the destination country with all associated costs at the expense of the shipper.

Normally, ensuring the pallets are all certified is the shippers responsibility, agrees Margaret. But some shippers are unaware, so it’s always best to alert your shipper that they need to make sure all pallets sent are properly treated to the ISPM-15 standard.

The bottom line is, whether you’re exporting or importing, save yourself some trouble. Do everything you can to ensure all pallets being sent are ISPM-15 certified!

Have you ever experienced difficulty importing products because they arrived on improperly certified wooden pallets?

The post Exporters: Are your wooden pallets taking a bite off your bottom line? appeared first on Trade Ready.

Although the country has a relatively large population of more than 30 million people, no one looks to the local market because it’s so small, he says.

Our main income comes from trade, and practically every company and manufacturer dreams of exporting. But the problem is, no one is teaching the business of exporting.

Export and market development grants have been readily available from the Malaysian government for years, but the problem for would-be exporters isn’t necessarily the money. They are participating in exhibitions and attending tradeshows, but there’s a lack of understanding of how to take advantage of and engage in global trade opportunities once they’re identified.

“That’s the reason I retired from the government and started coaching Malaysians to go into international markets,” he says.

From international trade expert to international trade trainer

Dr. Ibrahim served as a diplomat for over 15 years. He was also the Malaysian Trade Commissioner in Belgium for nearly a decade, and in Johannesburg, South Africa for eight years after that. He now serves as the Chairman of the Malaysian Training Providers Association.

In 2007, he took his professional experience, his knowledge of the need for export training in his country, and his general flare and passion for international trade, and created the Malaysian Export Academy—the first and only of its kind in the country and the region.

The Academy offers 100-percent government-funded international trade courses and seminars for business professionals in the region, and is attended by 200-300 individuals each month. This year, Dr. Ibrahim also wanted to offer more comprehensive international trade training, as well as diplomas and the opportunity for global certification to his trainees, as opposed to just certificates of completion. To do so, he made the move to become a delivery partner of the Forum for International Trade Training (FITT).

I was looking for a very reliable well-known international body to support the Academy, and I saw that FITT has a good network.

The Academy is pleased to start offering training toward both the FITT Certificate and the FITT Diploma in International Trade. So far no one is offering this in Malaysia, and the Academy will be the first, says Dr. Ibrahim.

“We are delighted to welcome the Malaysian Export Academy as a FITTskills Delivery Partner,” says Silvia Baptista, FITT’s Manager of Product and Service Delivery. “We really look forward to working with Dr. Ibrahim and his colleagues at the Malaysian Export Academy.”

Malaysia’s export environment

In Malaysia, about 30 percent of exports are commodities, including products such as palm oil, petrol, cocoa and rubber.

As far as manufacturing goes, a lot of American technology companies are building their high-tech products in Malaysia. The country also manufactures a lot of products from palm oil and rubber.

“We are the biggest exporter of rubber gloves in the world,” says Dr. Ibrahim.

The international export of services is another area of growth in Malaysia, including engineering services, architecture and education, he says.

There’s a lot of competition from Asia, especially countries like Indonesia and Thailand, because they produce similar products to us, yet they have cheaper labour.

“This is why we’re moving toward high-tech products and services.”

The competition, coupled with the fact that many nearby countries can still depend on their own markets for growth while Malaysian companies have to look to foreign sales means there is certainly a niche for international trade training, says Dr. Ibrahim.

Developing export skills in SMEs and the future Malaysian workforce

Many of the program instructors at the Academy are local trade experts from within Malaysia, including Dr. Ibrahim himself. Others, however, come to teach from as far as the UK. The trainees also aren’t just travelling from within Malaysia: they’re coming from nearby Indonesia, Laos, Vietnam and Cambodia as well.

Dr. Ibrahim is targeting two main audiences with the program: business executives from SMEs who want to boost their skills in exporting, and individuals who have graduated but want skills like those offered in this program to make them more employable and export ready.

“Our main aim is to teach Malaysian SMEs to go to international markets using your program,” he says.

The post Partnering to build export skills and readiness in Malaysia’s SMEs appeared first on Trade Ready.

Each of these issues must be negotiated between exporters and importers to clearly determine which party is legally responsible for each specific aspect of the trade transaction. These discussions can be compounded by disparities in language and culture.

To improve communication and mitigate the risks of misunderstandings, the ICC developed Incoterms (International Commercial Terms) to serve as universal trade definitions. It is now far easier for trading partners in different languages and from different cultures to do business.

How and why to use Incoterms

The Incoterms establish clarity in issues such as:

• Costs: Who pays for the various shipping expenses (packing, transportation, duties) encountered throughout a shipment’s journey?
• Ownership/Responsibility: At various points of the shipment’s journey, which party owns the goods and assumes the risk?
• Liability: If goods are damaged, who is responsible for paying damages, and at what point?

Do use Incoterms to establish party obligations, risks and costs with regard to:

• Delivery terms (destination, timelines, proof requirements)
• Standards of conduct
• Required or government imposed licenses and formalities
• Transportation mode and carriage terms
• Transfer of risk from seller to buyer

Don’t use Incoterms to:

• Outline rights and obligations for service contracts or any contract other than delivery
• Outline provisions before or after delivery (only during)
• Define breach remedies
• Determine how title of goods is transferred

Incoterms categories and responsibilities

Each incoterm is referred to by a three-letter abbreviation, and they are usually listed by category.

Rules for any mode or modes of transportation:

• EXW — Ex Works: The seller’s minimum responsibility is to make the goods available at the specified location. The buyer accepts all other risks and costs.
• FCA — Free Carrier: The seller ensures the goods are made available for the buyer’s named carrier at a specific named location. The buyer then assumes all risks and costs.
• CPT — Carriage Paid To: The seller pays the freight to a named destination. The buyer then assumes all risks and costs.
• CIP — Carriage and Insurance Paid To: Same as for CPT, but the seller must also provide insurance. The buyer then assumes all risks and costs
• DAT — Delivered to Terminal or Port (Used for ocean or inland waterway transport or multimodal transport): The seller pays all transport costs to a named port but does not clear the goods through customs. The buyer then assumes all risks and costs.
• DAP — Delivered at Place (Used for all modes of transport, as long as the final shipment to the named place is by land): The seller’s obligations terminate when the goods are delivered to the specified place. The buyer is responsible for clearing customs. The buyer assumes all risks and costs from this point on.
• DDP — Delivered Duty Paid: The seller pays all costs, including customs clearance, associated duty/taxes and delivery costs, to the buyer’s named delivery address.

Rules for sea and inland waterway transportation:

• FAS — Free Alongside Ship: The seller’s obligations are fulfilled when the goods have been placed alongside the principal ship at the dock or specified port. The buyer then assumes all risks and costs.
• FOB — Free on Board: The seller’s obligations are fulfilled when the goods are placed on board the ship by the exporter. The buyer then assumes all risks and costs.
• CFR — Cost and Freight: The seller pays all costs necessary to transport the goods to the named destination. Risks are transferred to the buyer when the goods pass over the ship’s rails.
• CIF — Cost Insurance Freight: Same as for CFR, but the seller must also provide marine insurance.

Each of these groups reflects varying degrees of seller cost and risk, and establishes the balance of responsibilities between the buyer and the seller.

Departure, main carriage unpaid and main carriage paid Incoterms are all shipment contracts. In these, the seller delivers simply by handing over the contract goods to a carrier somewhere on the seller’s side.

Depending on the terms, the place could be the seller’s premises, a carrier’s terminal, and a forwarder’s warehouse, or alongside or on board a ship. The need for payment to be made to the seller is recognized as soon as this delivery occurs.

Incoterms letter meanings

Terms beginning with the letter ‘E’ indicate that the seller’s responsibilities are fulfilled when the goods are made available for shipping by the buyer’s chosen carrier.

Terms beginning with the letter ‘F’ refer to shipments where the primary cost of shipping is not paid for by the seller.

Terms beginning with the letter ‘C’ refer to shipments where the seller pays for a portion of the shipping but the seller’s responsibility ends when the goods are delivered to the carrier somewhere on the seller’s side.

Terms beginning with the letter ‘D’ are destination contract terms because the seller delivers somewhere on the buyer’s side. The shipper or seller’s responsibility ends when the goods arrive at a predefined point. Delivery on the buyer’s side means that recognition of payment is deferred.

What other advice or information about Incoterms do you think are necessary to become adept with them?

It is advisable for entrepreneurs to become familiar with Incoterms to accurately and clearly understand what rights they are entitled to and obligations they are responsible for when transporting goods internationally. This in turn can help them determine the insurance requirements compatible with their business needs.

The post Avoid logistics and shipping pains by refreshing your knowledge of Incoterms! appeared first on Trade Ready.

One of the most important reasons is to gain access to another company’s knowledge or resources.

Companies can also decide to join forces to develop new products or to enter a market that neither could enter alone.

Other reasons for developing strategic alliances include the following:

• Forming economies of scale
• Enhancing competitiveness
• Dividing risks
• Setting new standards for technology
• Entering new markets
• Overcoming the competition in a market

Acquiring new skills and resources

Often, when companies co-operate on a project, they exchange skills that are not for sale. Typically, one partner possesses technological expertise and the ability to keep abreast of rapidly evolving technological developments. What that partner needs from the other partner or partners is capital, large distribution systems, marketing expertise, service networks and credibility in the marketplace.

Each partner therefore provides the other with vital resources and uses the partnership to extend its skill set into new areas.

1. Forming economies of sale

Partnerships can generate economies of scale that will enable the participating companies to marshal a broad set of resources and achieve the critical mass needed for international success.

Companies with complementary skills can rely on each other’s proven expertise instead of spending time and resources to independently develop what has already been achieved.

2. Enhancing competitiveness

Many international trade projects require expertise from different fields. Traditionally, companies have tried to develop or maintain all the required skills in-house. However, as technological and administrative complexity increases, companies are learning that they cannot do everything by themselves. As a result, the most competitive corporations are adopting a strategy of maintaining their core competencies only.

Gaps in the skill bases are then filled by partnering with a company that has the missing skills. This strategy avoids the need to expend resources and run the risks associated with developing the skills in-house.

3. Dividing global business risks

Risk sharing through partnering is most often seen in research and development areas. Research and development costs are always increasing and the speed of innovation means that products rapidly become outdated and the risks of investing in developing new products are high.

Sharing research and development costs and facilities provides good value for money, while sharing expertise can speed up the process.

Partnering can be used to share risk in other areas as well. For example, companies can share transportation and distribution systems, which saves money and enables faster delivery of the product.

Joint marketing is another way of spreading risk and increasing returns. It is now extremely common for film producers, book publishers, toy manufacturers and fast food outlet owners to co-operate in parallel promotional campaigns that spread the risk involved in new ventures, reinforce each other and maximize returns to each of the participants.

4. Setting new standards

The development of new technologies creates entirely new market opportunities. The first company to create a new technology might set the standards for its industry simply because it is the first.

However, several competitors might develop similar technologies at about the same time. It is very difficult to predict whose technology will set the standard for the industry, so trying to be the first into the market with a new technology can be very risky.

Forming alliances is one approach to establishing standards in an industry.

It also increases the chances that the standards a company invests in will be accepted throughout the industry. Standards make markets, and for this reason, many high technology companies cannot afford not to be involved in some sort of alliance, consortium or other co-operative effort.

5. Entering new foreign markets

Strategic global business alliances are effective ways of entering new foreign markets. Partners can provide established marketing and distribution systems, as well as knowledge of the markets they serve, ensuring that products get to market faster and are more likely to be purchased.

Foreign partners can advise a company on how to modify a product to meet local regulations and market preferences.

They can help with such issues as translation of documentation, conversion from metric to imperial measures, conversion of power requirements and compliance with packaging regulations.

Strategic alliances can also be useful when market conditions or government policies present market entry barriers. Partnering with a local company can help overcome these barriers.

6. Overcoming competition

Companies often co-operate in marketing or distribution to overcome competition.

A well-conceived alliance can mean a head start in a market, possibly even preventing other competitors from entering.

Forming an alliance with an established, major company can reduce the influence of other companies. However, companies should be careful that alliances do not form a cartel or otherwise breach anti-competition laws in the target market.

The post 6 Reasons for forming strategic global business alliances appeared first on Trade Ready.

I have to wonder though:

Is it really that we’re backsliding toward a protectionist mentality when it comes to international trade, or are these measures being taken simply as acts of political persuasion?

In other words, are our world leaders foregoing long-term economic gains in the name of short-term politics?

Negotiating NAFTA

The United States, for example, is in the news every day as a player in the pursuit of bigger and better global trade deals. There’s the Trans-Atlantic Trade and Investment Partnership (TTIP), which is a proposed free trade agreement with the UK, and the Trans-Pacific Partnership (TPP); a 12-country agreement for which the U.S. has been part of negotiations since 2008.

There’s also the U.S.’s recent technology-related agreement with China, which promises to reduce tariffs on high-tech goods, and a breakthrough agreement with India regarding food stock holdings.

This agreement is ‘clearing the way for passage of the biggest trade deal in the World Trade Organization’s 19-year history,’ reports Bloomberg’s Unni Krishnan.

However, at the same time as the U.S. is negotiating these new trade opportunities, it’s been creating some tension with its older trade partners.

In 2008, the U.S. passed new rules regarding the labelling of meat. Although these rules were updated in 2013, they are still prohibitive for Canadian and Mexican meat exporters, and resulted in a reduction of Canadian meat exports to the U.S. by half, according to the Canadian beef industry.

The World Trade Organization’s (WTO) compliance panel ruled against these meat labelling procedures—referred to as country-of-origin labeling (COOL)—three times, stating that they break trade rules because they treat Mexican and Canadian livestock less favourably than U.S. livestock.

Canada’s Agriculture Minister responded to the situation by threatening its own punitive duties on products such as ketchup and California wine, among 38 other commodities listed.

Mexico and Canada will be permitted to retaliate with duties totalling anywhere from $1-2 billion each year if the U.S. doesn’t bring its COOL regulations into compliance.

What came first, the chicken or the trade?

India has similarly been creating challenges for the U.S. meat and poultry industry ever since it implemented an agricultural ban in 2007 to prevent the spread of avian influenza, or bird flu. The issue is that there hasn’t been a case of this flu in the U.S. since 2005.

The WTO recently ruled that India violated a number of trade rules when it set the ban on American meat, poultry, eggs and live pigs.

Our farmers and producers deserve a level playing field—and this dispute reflects that we will accept nothing less, said U.S. Agriculture Secretary Tom Vilsack to USA Today.

U.S. trade and agriculture officials hope this ruling will give the U.S. a case against other trade barriers they find arbitrary.

“We want all WTO members to abide by the rules that have been established and to avoid using arbitrary, non-scientific claims to prevent competition,” said David Miller, director of research and commodity services for the Iowa Farm Bureau Federation to USA Today.

When global business loses out to geopolitics

The unrest in the Ukraine earlier this year resulted in a number of international governments applying sanctions against individuals and businesses in both Russia and the Ukraine. Although these sanctions don’t have anything to do with governments’ efforts to protect local growers, producers and manufacturers, they do show a prime example of trade being used as a geopolitical tool rather than for economic development.

Russia retaliated to these sanctions by banning agricultural imports from the EU, the U.S., Canada, Norway, and Australia for a year.

These trade barriers are creating heavy losses for agricultural exporters, especially in the EU’s Germany, Poland and the Netherlands—Russia’s biggest trading partners. But the hardships obviously extend further than these three countries.

If there isn’t a sufficient market, prices will go down, and we don’t know if we can cover the costs of production, because it is so expensive, Jose Emilio Bofi, an orange farmer in Spain, told RT.

These trade bans also have negative ramifications for Russia itself, as it now has a $9.5 billion gap to fill in its food market. The country has been looking to Latin America, as well as Kazakhstan and Belarus, to avoid trade with Western nations.

The deer and the hare

I came across a wonderful fable by philosopher Jean-Jacques Rousseau that sums up these types of politics-over-economics situations. It is apparently often used to explain to students of international relations the potential pitfalls of acting individually for small, short-term gains:

A group of hunters go off in search of a deer. They need to work together as a team if they hope to catch one, but a single hunter could successfully capture a hare all by himself. One of the hunters becomes distracted by this opportunity, and does indeed abandon his party to pursue the hare. As a result, the deer escapes.

The individual hunter does catch his hare, but he also misses out on the bigger opportunity to cooperate and catch the deer, which would have brought greater benefits to the entire group.

As in the fable, it can be difficult to sustain cooperation when individual incentives can be realized in the short term by cheating out partners. However, a bit more patience and cooperation can result in greater rewards for all.

What do you think? Are there situations during which trade protectionism is warranted, and what are they?

The post Are countries using trade protectionism to safeguard their economies or as political ammunition? appeared first on Trade Ready.

Early in 2014, we began our International Competency Standards (ICS) project with the goal of creating world-class industry standards and defining exactly what it takes to outperform the competition in global trade.

Hundreds of international trade professionals are taking part in various focus groups across Canada. We even have global business experts from other countries participating in this first-of-its-kind initiative.

We’re excited to announce that, in an effort to continue moving toward world standards in international trade, FITT has collaborated with the Institute of Export & International Trade (IOExIT) UK to cross-accredit both organizations’ international trade credentials.

Individuals who earn FITT credentials can now also apply for IOExIT’s equivalent credentials and vice versa, with a few exceptions.

We’re confident this new collaboration will build on our ICS project efforts, and help to further consolidate trade training standards in Canada, the UK, and globally.

We are very proud to be working with FITT, one of the only organisations we have found currently committed to the quality that we aspire to here in the United Kingdom

says Lesley Batchelor OBE, Director General of the IOExIT. “We hope that this is the start of many collaborations that will bring a standard and recognition of the value of studying world trade and getting it right!”

Setting the standard for international trade training

FITT and the IOExIT are world leaders in providing quality international trade training, developed by-business for-business. Both are committed to equipping individuals with the knowledge and skills needed to succeed in today’s competitive integrative marketplace.

IOExIT was established in the UK back in 1935 after a period of heavy recession to support economic recovery by increasing exports in goods and services. FITT was later established in 1992 to support Canadian business growth through global trade. FITT’s teaching models were originally modelled after what FITT-founder Dieter Hollweck saw organizations like IOExIT doing in Europe at the time.

“FITT and IOExIT are committed to ensuring quality international trade programs and credentials,” says Caroline Tompkins, CITP®|FIBP®, FITT President.

Strengthening trade competencies internationally will benefit not only individuals but also their employers, and ultimately the world economy.

Strengthening international trade ties

Silvia Baptista, FITT’s Manager of Product and Service Delivery, has been working hard with IOExIT staff throughout the extensive process of mapping the qualifications that both organisations have developed and maintain.

“The cross-accreditation process has been well worth the effort,” she says. “This collaboration will only increase the global visibility of credential-holders from both organizations, and it will further us all on the path toward creating a globally recognized set of international business standards.”

Silvia would also like to thank FITT’s Certification and Accreditation Committee for their support in approving the cross-accreditation.

CETA has set the stage for enhanced trade and investment between Canada, the UK and the rest of the 27 EU member-states. Collaborations like this will further equip trade professionals with the skills to ease trade between our countries, in addition to creating international growth and more global career opportunities.

The post Canada and the UK take the lead in creating global international business standards appeared first on Trade Ready.

While Alberto was trained and experienced in electrical and mechanical engineering, he was unable to find work in his field once he immigrated because he didn’t have any Canadian experience.

After some career counselling, Alberto was urged to transfer his skills and go into sales to help companies grow their business into foreign markets. He took that advice, signed up for FITT-accredited international business courses, and made a game-changing shift in the direction of his career.

Launching a career in international trade

Before Alberto could even finish his courses, he was offered a job as an export sales manager. The company sold products used in mining, and was looking to grow its business into Latin America; specifically Chile and Peru.

Since starting in international trade, Alberto has worked in over 20 countries around the world. He speaks English, Spanish and French fluently.

His current role now has him specializing in the sales and marketing of electrical and HVAC equipment to global markets, including Latin America, the Caribbean, Europe, Middle East and Asia. He says his technical engineering background provided him with the strong foundation he needs to understand complex applications and the implementation of new technology.

Looking beyond the risks to start succeeding international business

Alberto’s company is now expanding into his home country of Mexico, and that’s his lead role.

“It’s very simple in a way,” says Alberto of entering new foreign markets. “You just have to find and understand the market, map out who your customers are going to be, and develop a strategy to go out and get them.”

Although the process can be simple, there’s still a lot of hesitation within other Canadian companies to grow globally, says Alberto.

Canadians are particularly conservative and they don’t enjoy risk as much. It’s a Canadian cultural fear.

But that fear of risk is also a good thing in some ways, he admits.

“Canadians being conservative and a little bit risk-adverse is what saved us during the financial crisis in 2008,” he says. “You don’t go out and buy a house and then borrow more money from the bank to go and expand your business.”

However, that aversion to risk becomes harmful for Canadian companies when it comes to succeeding in international business.

There are a lot of mechanisms to make it safe, and there are always ways to reduce the risk. And the reward is there. There are always so many opportunities.

Alberto also feels that having the benefit of the U.S. right next door deters a lot of Canadian companies from looking elsewhere to do business. They become comfortable and familiar with doing business so close to home, and expanding beyond that seems risky and obstacle-ridden.

But like with anything in life, knowledge can help companies overcome the obstacles and manage the risks in order to succeed, he says.

Contributing to the global business community

Alberto finished his FITT-accredited courses in 1996 and went on to become a CITP in 1998.

Once I became a CITP, it became clear to me that the designation needed to be known. There’s strength in numbers.

Twelve years later, he affiliated himself with FITT even further by being elected as a member of its Board of Directors. In this role, he continues to spread the word about the designation, and reinforces the benefits and standards it provides to the global business community.

Alberto is very passionate about the work he does in international trade, and he sees many opportunities for Canadian companies to do more business all over the world.

“I think as a Canadian who wasn’t born and raised here, I’ve done very well in Canada and I want this country to be better, and the only way we can have a better economy and a better life for everyone is if we trade more.”

The post Succeeding in international business by having the knowledge to overcome trade risks appeared first on Trade Ready.