Everyone was prepared to sign on the dotted line; Ted could see the balloons and champagne in the next room. But all of a sudden, one of the representatives mediating the contract came in abruptly.

“I’m sorry, we want 25 percent off your price,” he said.

Ted cast a look at his colleagues. With a nod to each other, they rose and gathered up their paperwork.

Testing the limits during international business negotiations

Ted turned to the rep. “Thank you very much, it’s been a pleasure doing business with you. We’re leaving tomorrow morning at 8 o’clock, if you want to discuss this further, that’s fine.”

Ted and his colleagues left.

An hour later, they got a frenzied phone call from the company retracting their statement; they wanted to sign the contract. Ted knew immediately what had happened; the Chinese businessmen had been testing him. They wanted to make sure that Ted wouldn’t sell for less than originally negotiated.

By refusing to budge, Ted had passed the test. Later, Ted’s team popped the bottle of champagne and all laughed about it.

It all started with a simple passion to work overseas

Ted Benson has over forty years of experience in international trade. He has learned through trial and error, time and again, the skills he needs to be successful in the industry.

In his spare time, he also marks course projects for the Forum for International Trade Training (FITT), and is helping compile an international business glossary for FITT.

 Participate in the International Competency Standards Project

After graduating with a degree in geology, Ted started his career as a pilot in the air force, and had the opportunity to do some international programs. Later on, he found his calling in negotiating contracts for the Canadian Commercial Corporation (CCC), on behalf of Canadian companies.

Ted’s passion for Asian culture, coupled with his contracting experience, earned him a spot as a Trade Commissioner for the Foreign Service in Beijing. From there, he did exchange postings in Shanghai, Bangkok and Hanoi before returning to Canada and the CCC years later.

It was then that he saw the shortage in global trade skills.

Because I mark exams, I have to be current on my skills and knowledge. I see skills that are lacking, and incorrect impressions from those who currently work in this industry.

Learning from a ‘not so friendly’ pricing strategy

He recalls a Canadian company he worked with that would typically use penetration pricing as a way to enter a new market. The company was headstrong and their product had value. However, their Chinese counterparts had an expression: ‘Friendship Pricing’.

The Chinese company insisted that because they had such a large market, the Canadian company could give them a really good deal and the size of the market would more than make up for the lower margins the Canadian company might receive. The Canadian company, eager to tap into such a large market, agreed.

But because the Canadian company had agreed to the low ‘friendship price’ once, when they returned to do business in the future, the Chinese company made it a rule to start at that fixed price, and wager down from there.

Needless to say, it didn’t end well, and the Canadian company earned little to no profit.

Ted has specialized in large-scale sales in Asia for years, and through all his experience he has developed the skills to avoid such massive mistakes.

Attention to detail and cultural competencies are vital to success

Some years ago, a colleague of Ted’s worked with a Canadian company that had signed a contract with another company based in Shanghai— but the goods were late getting to China.

This kind of mistake could cost a company thousands of dollars. The Canadian company’s one reprieve? The company in Shanghai had forgotten to put a Liquidated Damages clause in their contract.

The Shanghai company argued that even though it wasn’t written in the contract, the intent of their agreement was a penalty for late delivery of the goods. Therefore, the Canadian company would have to pay the fee.

The Canadian company firmly stated that they operated on the basis of what was in the contract. The Shanghai company, enraged, argued all the way to the airport.

Ultimately, the contents of the contract were legally binding.

The Canadian company had been lucky, but many companies would have had to pay penalty fees.

You have to know every aspect of drafting a contract. You have to know that 70 percent of letters of credit are invalid in most cases, and that for every day you’re late delivering your goods to the buyer, a Liquidated Damages fee could be charged. Educate yourself on these terms; develop those skills.

But it isn’t just sales and negotiating competencies that can make or break your global trade deals. Culture and language skills are also crucial to success in foreign markets.

Years ago, Ted was enjoying his breakfast in a hotel in Beijing, and his competitors were sitting nearby. They hadn’t recognized him, as he was new, and they were speaking openly about their strategy in Chinese.

Ted listened carefully, and then raced back to his team to relay all the information he had gleaned. He knew how important his language skills were, right then. He currently speaks Mandarin, French, Thai, Spanish and a social amount of Vietnamese.

Skills development is key to building a global business career

While working in Vancouver for the CCC, Ted took the FITTskills courses and found that the comprehensive international trade skills he developed were essential to his job. He then went on to teach the FITT courses in British Columbia, and eventually became a project marker.

Ted believes that in addition to taking international trade courses to hone the skills needed for global business, the job profiles being developed through FITT’s ICS project will also be necessary to ensure global trade professionals are fully equipped to do their jobs.

The ICS job profiles will identify which skills are needed to do the jobs core to international trade. This will enable practitioners to build on their existing skills through professional development, and it will ensure students are learning the skills they need to begin their global business careers with the tools to succeed.

There is an absolute demand for these competency profiles. You can’t play tennis unless you know how to hold the racket, right? You have to have the skills.

What does Ted think is ultimately the key to success in global business?

“Enthusiasm is so important,” he says. “You have to enjoy the multi-cultural experience, be persistent, determined and focused on the objective.”

Are you interested in participating in our International Competency Standards Project? Join international trade experts from all over the world. Come be a part of setting world-class industry standards and defining exactly what it takes to compete in international business!

I want to participate!

The post Why skills development is vital to the growth of your global trade career appeared first on Trade Ready.

Lindsay Brumwell is a Trade Specialist, Agri-Value at Saskatchewan Trade & Export Partnership (STEP), which champions the province of Saskatchewan’s export industry and assists provincial businesses in realizing global marketing opportunities.

In this role, Lindsay has led agri-value market development missions to Colombia, Ecuador, Mexico, and the United States. She is working on a current project to further the market and trade development of food ingredients for both animal and human consumption into Mexico.

Before Lindsay began at STEP in 2012, she spent five years as the Trade Development Coordinator in the Business Development Unit at Port Metro Vancouver (PMV)—the most diversified port in North America—operating as an international gateway for automobiles, breakbulk, bulk, container and cruise.

Lindsay attended the University of British Columbia and graduated with a Bachelor of Arts in Latin American studies, and a minor in International Relations. She also has her master’s diploma in International Management (Latin America and Asia Pacific) from McRae Institute of International Management at Capilano University.

Lindsay decided to pursue the CITP®│FIBP®  designation as a way to enhance and sharpen her global trade skills.

I applied for the designation because STEP really encourages and values the designation in our workplace.

The designation gives her one more pathway to excel in a career that she has worked hard to establish.

Lindsay’s devotion to STEP and her clients is evident, as she was peer-selected for the organization’s Innovation Award because of her initiative. She is known as a dedicated and determined professional who is always looking for ways to tap into new markets and seize opportunities for the benefit of her clients at STEP.

I’m extremely happy I earned the designation. I foresee it being a resource in my future career to access the FITT community and help me, and STEP, grow.

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1. Monopolies

A monopoly situation represents a very serious entry barrier. A monopoly occurs when one company is the main provider of a product or service in a market. Monopolies might be state owned or can be created through takeovers of competing companies.

Monopolies often block entry to competitors by using patents and licences to prevent the development of possible substitutes, by controlling distribution routes, resources or suppliers, or by using pricing strategies.

One example of a monopoly-type situation is the provision of Internet services in North America. Because of the way Internet signals are carried (through cable or phone lines), consumers usually only have one of two choices for how they obtain their Internet service: through their phone company or through their cable provider. In rural areas where cable has not been installed, the phone company will be the only provider of Internet services for most customers.

If entering companies cannot access an efficient or cost-effective distribution system because incumbent companies control distribution networks, their goods or services are unlikely to be successful.

If supplies and resources in the target market are cut off because of an exclusive deal with incumbent companies, an alternative supplier from another market will need to be identified if possible, although this will be more expensive. In the case of the Internet providers described above, a new company wishing to provide Internet service would have to install new wiring to all areas it was targeting. This would be prohibitively expensive. Incumbent companies can also charge lower prices than new entrants and often use this as a strategy to dissuade competition.

2. Legal protection

Poor legal protection available to foreign companies also acts as a barrier. If a company cannot assume protection of its intellectual property (copyrights, patents, trademarks) and fair and effective dispute settlement mechanisms, it is likely to suffer losses in the market. In some countries, resorting to legal action over a commercial dispute can be futile, because neither the law nor the courts favour the foreign exporter.

3. Bribery and corruption

In many countries, business activities are commonly sped up or made possible through the payment of bribes.

Corrupt practices can be used to induce a government to adopt measures that are favourable to an industry or to influence government purchasing decisions.

In other cases, key officials and decision makers will demand some form of payment to allow a transaction to proceed. Although public opinion in the target country may be against such practices, they remain a reality. While local companies in such countries treat bribes as an everyday business occurrence, foreign companies can face severe civil and criminal penalties for paying bribes. This puts them at a disadvantage in the market.

Strategies to consider

Companies should remember that no matter how different the conditions, there are business people who thrive and prosper in virtually every country of the world.

Therefore, one strategic response is to partner with local business people who do understand the system and can work it to commercial advantage. When entering a market dominated by a monopoly, companies must understand that they have a high chance of failing and be prepared to lose substantial amounts in sunk costs.

Perhaps the most successful strategy is to differentiate their product or service from that provided by the monopoly. Companies should limit their exposure in countries that lack legal safeguards, especially when they have valuable intellectual property that is essential for their success.

The post Top three potential barriers to foreign market entry appeared first on Trade Ready.

Zeeshanali Fazal is an Underwriter and Advisor of Financial Guarantees at Export Development Canada (EDC) in Montreal, Quebec. He was born in Kinshasa in the Democratic Republic of Congo, where he spent his childhood. Zeeshanali moved to Pakistan in the early 1990s, and by the late 1990s he moved to Canada where he completed his high school, CEGEP and university education in finance.

Zeeshanali began at EDC in August of 2009 as an Underwriter in the Undergraduate Rotational Program with assignments to the Accounts Receivable Insurance, Contract Insurance and Bonding and Small Business Financing teams. In 2011, he transitioned into his current position.

His role as Underwriter and Advisor of Financial Guarantees is to work with Canadian exporters to assess and mitigate the financial and non-financial risks of their international trade transactions. He feels a duty to his clients to not only assess the best steps to help them grow in international markets, but also to advise them of the challenges and pitfalls involved in entering new global markets.

Zeeshanali began his journey to the CITP│FIBP designation through the FITTskills program. He says the program gave him the opportunity to see the complete picture of the complexities of international trade.

The FITTskills program is not just about learning through books and writing exams. In fact, it also gives us access to a network of respected individuals working through globalization and helping grow international trade, and a platform to seek help, share knowledge and ask for expert advice!

He says that from trade regulations to the cultural aspects of international trade and the various financial systems, FITT prepares candidates to think of the various risks and challenges. It also helps people mitigate the risk of loss and surprises.

Zeeshanali is passionate and committed to helping his client-companies enter foreign markets, and feels the designation increases his credibility.

The CITP|FIBP designation builds the fundamentals of international trade and gives me added confidence in my consulting role. When clients see the designation, they have increased faith in the discussions, and every word has more weight.

Zeeshanali is eager and enthusiastic about his global trade future, and feels like his designation acts as a reinforcement of his interest in his career in international trade.

“FITTskills and my designation have built a strong foundation of international trade concepts that will play a vital role as I help customers through various stages of contract negotiations, and structure contracts that are not only financially feasible but also take into account the various challenges of international trade.”

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From Human Resource Director to Steering Committee Member

Throughout this project—which will define and standardize the knowledge and skills needed for occupations core to international trade—Scott will be lending his real-world business experience.

As a Steering Committee member, he will help us ensure the results of our project are practical and applicable to the industry. It will also give us more insight as to how the results of our project can be used to help companies like his continue to hire the most competent international business professionals and fill human resource gaps.

During his career in human resources, Scott has done business with Canada, Mexico, the U.S. and Europe. He has been working at Emerson for 26 years, ever since it purchased  Fisher Controls International Inc. in 1992. Emerson helps businesses automate their production, processing and distribution facilities in a variety of core industries.

So why is Scott so passionate about this project?

He believes, unquestionably, that there is a demand for classifying international trade competencies.

I am a big proponent of a competency-based system. It is a focusing mechanism, and it is a must.

Emerson currently uses a competency program for its hiring, which begins with highlighting a long list of competencies. His human resource team then goes in and ranks the competencies in terms of low, medium and high priority. Once they whittle down to the top 20, they can begin to determine the critical competencies to fill the role.

“Sometimes I think  the number of competencies we come up with for a job position becomes so many that there is too much work needed to determine what is truly critical for success,” says Scott.

Simplifying the hiring process

The International Competency Standards that FITT is seeking to create will simplify this process, and remove much of the legwork. With the assistance of practicing international trade professionals in a variety of sectors, jobs and ranks across Canada and internationally, we will pinpoint the skills and knowledge needed to succeed in approximately 50 occupations core to international trade.

Despite any challenges with its current competency program, Emerson is world-class in terms of creating jobs internationally, and is very much ahead of the curve, says Scott.

He sees how necessary global trade is for Emerson’s growth and success, and in turn how crucial it is to hire the right people with the right competencies.

Recognizing the core competencies for international trade

With all his experience in the industry, Scott has identified what he sees as some of the key competencies necessary for success in global trade.

“You have to have managers who can operate in international environments,” he says. “They have to be able to be in Russia one day, be in Africa the next, and in Korea after that. When we recruit, we view someone who has spent time in other areas of the world as having a tremendous advantage.”

Scott also views multilingualism as a huge asset, and looks for that in his potential candidates for Emerson.

A common thread to help all Canadian businesses

International trade, and the skills needed to do it competently, is not only a key component to the success of Emerson, but for many businesses around the world.

The Competency Standards we’re developing will help companies identify which knowledge, skills, and abilities they need to seek in new employees, and to develop their current staff. This will assist them in filling their human resource gaps and creating the best teams for global success. —Caroline Tompkins, CITP|FIBP

Now is the time when global trade is transitioning from being viewed as a series of add-on business activities to competency-based occupations that are core to trade.

Standardizing these occupations, and the knowledge and skills needed to do them competently, will make it easier for individuals and companies to develop and build their capacity.

Are you interested in participating in our International Competency Standards Project? Come be a part of setting world-class industry standards and defining exactly what it takes to compete in international business!

The post International trade competency standards will promote skills development and global businesses growth appeared first on Trade Ready.

Product design can also address the costs involved with transportation and inventory. These are often critical supply chain cost drivers, especially when inventory levels must be kept high to ensure service levels.

Product design can address these supply chain issues using the following three key components:

• Packaging and transportation
• Concurrent and parallel processing
• Standardization

Packing and transportation

One of the most important areas of product design is ensuring that products can be packed and stored efficiently. Goods that can be packed compactly are obviously cheaper to transport. A common example of this use of product design is flat-pack furniture.

As well as cost reductions, retailers are more likely to choose a supplier with products that take up less storage space and that can be stacked easily.

Weight is also a product-design issue that will affect transportation costs. A company might find that more expensive, lighter materials are cost effective when reduced transportation expenses are taken into account.

Concurrent and parallel processing

Lead times associated with suppliers, manufacturing processes and deliveries are a major interruption to the flow of the global supply chain.

In many manufacturing situations, a series of products or components are produced and then put together to make a final product. Delays can occur between each stage in the manufacturing process.

In concurrent and parallel processing, the manufacturing process is redesigned so that all production steps take place at the same time. This reduces manufacturing lead time and reduces inventory costs.

Standardization

Companies can standardize product components or processes. In product standardization, common components are used in many different products. This reduces the requirements for extensive component inventories and reduces costs.

In process standardization, the manufacturing process is standardized as much as possible for all different products. Products are only customized and differentiated late in the production process.

Process standardization usually involves redesigning products so that they can be customized late in production.

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Inventory can refer to raw materials, finished items available for sale, components being used for production or items in the process of being manufactured. In terms of supply chain management, inventory is normally used to refer to the sum total of all goods and materials on hand.

The basics of inventory management

There is a wide range of terminology associated with inventory management. Here are some of the most common terms, concepts and issues regarding global supply chains:

Ordering

Economic order quantity (EOQ) is a model commonly used within inventory management that defines the optimal quantity to order that will minimize the total inventory costs.

Inventory levels

Inventory levels are simply the amount of inventory a company has. Common phrases about inventory levels include:

• On-hand stock (the amount of inventory in storage)
• Net stock (on-hand stock, minus product back orders that must be delivered to customers)
• Net inventory (on-hand stock, plus purchase orders, plus pipeline inventory, minus back orders)

Stockouts

A stockout occurs when there is insufficient stock available to meet customer demand. To avoid stockouts, companies can stock high levels of inventory. However, the costs associated with this are very high. There is also no guarantee that the excess inventory will ever be required.

Instead of storing excess inventory to mitigate against possible stockouts, companies can use backordering or can provide a substitute product. In backordering, the customer request is placed on a special order called a backorder and this order is filled as soon as possible. The order will often be shipped directly to the customer as soon as it is available.

Finances

Financial terms involved in inventory management are as follows:

• Average inventory value: The average value of the inventory investment over a year
• Inventory carrying cost: The cost of holding the annual inventory investment
• Lost sales cost: The revenue lost from not meeting customer demands
• Total policy cost: The inventory carrying cost plus lost sales costs

Demand

Every product will have a specific set of demand circumstances. In inventory management, common demand terminology includes the following:

• Annual demand: The amount of a product demanded in a year
• Forecast annual demand: The expected amount of a product that will be demanded in a year
• Lead time: The time taken from placing an order to fulfilling the order
• Lead time demand: The amount of a product demanded by customers during the lead time

Inventory and global supply chains

Inventory will also need to be considered as an aspect of global supply chain management. In order for customer service levels to be adequately maintained, some goods will need to be held in foreign markets. Inventory managers will need to make decisions regarding how much inventory to hold, and how the supply chain will need to function effectively to meet consumer need. Other considerations that need to be taken into account when establishing inventory in a foreign market are:

• geography and infrastructure;
• availability of qualified labour; and
• tax and industry regulations.

These factors will enable an organization to choose optimal locations for serving the foreign market, and will help identify any issues that may add complexity to the global supply chain.

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Dr. Faisal Mohammed El Amir is a Senior Industrial Consultant at Dubai Exports (DE), an agency of the Dubai Economic Development Department. Dubai Exports promotes exports by helping its client companies participate in exhibitions and outward missions. Along those lines, Faisal is responsible for export capability building.

Faisal is a passionate advocate of international trade. He does domestic-sector capability research, and identifies opportunities and initiatives for expanding and upgrading the manufacturing sectors’ export capabilities. He also initiated the Dubai TPO (Dubai Exports), and he established the Dubai Subcontracting and Partnership Exchange program.

I am a senior Dubai Quality Award assessor, and I have been playing active roles in industry planning and trade strategy formulation in both Oman and Dubai. 

Faisal says it’s incredibly important for him to be an expert in international trade, as he’s intricately involved in the exporting processes of Dubai. He specifically targets lucrative regional markets and responds to local exporters’ Member Service Requests as well as to buyers international service requests.

Faisal completed his CITP designation to give himself the necessary knowledge and capabilities in the industry to excel at his job.

The designation will help me a lot in my current work duties by facilitating networking with global experts to create benchmarks, identify opportunities and share market information.

Faisal is looking to the future, and everything the CITP designation can help him accomplish.

“I look forward for the designation to help me to share my expertise and knowledge with member colleagues, and to capitalize on my already long and rich experience in the Gulf Cooperation Council (GCC) trade and industry sector.”

The post Dr. Faisal Mohammed El Amir, CITP|FIBP — Senior Industrial Consultant appeared first on Trade Ready.

Jeff Cooper is a Trade Officer with the agri-value sector for Saskatchewan Trade and Export Partnership (STEP). He was born and raised in Prince Albert, Saskatchewan, and attended the University of Saskatchewan earning a Bachelor of Commerce with a major in management.

Jeff began at STEP as the Technology and Marketing Coordinator, and advanced to a Trade Officer position in 2013. His role is to help Saskatchewan companies within the agriculture and food industry expand their networks, build contacts and tap into new business opportunities in the international marketplace. He’s focused on developing, coordinating and executing market development strategies for companies in North America, Central America, South America and Europe.

Jeff’s passion for his career translates world-wide. His recent projects include leading a mission to the Taste of Canada Showcase in Chicago; leading a mission to the Vancouver Gift Expo in Vancouver; and hosting a delegation of incoming buyers from India.

Jeff says he chose to apply for the Certified International Trade Professional (CITP|FIBP) designation because it’s very much part of the culture at STEP, and he believes it’s highly useful and beneficial in his everyday working life.

So much of what the courses teach is used every day at STEP. The knowledge I gained helps me to do my job effectively and is a nice compliment to my university education.

Jeff began his pathway to the CITP|FIBP with the FITTskills online program. He found that the online program made obtaining his designation as simple as possible.

“The courses are all challenging, but you are allowed to work at your own pace whenever you have time,” he says.

For someone working full-time, not having to attend a physical class is a huge bonus. 

Jeff takes pride in his career, and he saw completing the exam as a major accomplishment. Having already accumulated more than a year of international trade work experience, earning his FITT Diploma in International Trade was his final step to complete before applying for the CITP|FIBP.

Jeff is looking toward the future, and everything the designation can do for him.

“I think the CITP|FIBP designation gives me more credibility in an international business setting, and it is a requirement should I look to pursue a management position here at STEP.”

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Reka Gajari is a Market Intelligence Specialist for Saskatchewan Trade and Export Partnership (STEP). She has a professional background in customer service and motivational team-leading, and she uses her interpersonal skills to make a difference in her work environment.

Reka began her journey at STEP as an Administrative Coordinator in 2012, and then transitioned into her Market Intelligence Specialist position in September of 2013. She is part of a dynamic team that provides customized reports to Saskatchewan businesses that help them export their products. Reka and her team compile the reports using intensive market-research to provide strategic intelligence and qualified leads on competitors in the industry.

“The work I do is for Saskatchewan companies, but the information I research is always outside of the province, so I’m learning new things all the time,” says Reka.

I get to learn about what companies in the province are doing, and I get to see what the opportunities are abroad.

Reka was born in Romania in the Transylvanian region, but she is Hungarian.  She came to Canada when she was only 18 months old, but the Hungarian language is an important part of her identity.  In the past she has had the opportunity to work as a Hungarian interpreter for international guests, which she loved. Now she is just beginning to grow her career in international business.

Reka chose to apply for the Certified International Trade Professional (CITP|FIBP) designation as a way to grow to her full potential.

“I had just finished my BBA at the University of Regina, and knew that having this designation would complement my degree and would be a great asset,” Reka enthuses.

She is constantly looking for new ways to grow within STEP, and she feels that the CITP|FIBP designation will give her more tenability in the workplace.

I feel the designation gives me more credibility with the professionals I deal with on a daily basis.

“I’m at the beginning of my career in international business, and I am happy to start off at a great organization that has presented me the right tools to do my job.”

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