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The state of Canadian SMEs involved in international trade

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COVID-19 has forced many businesses to re-assess their global strategies over the past year. Get insights on Asia development in the aftermath of the pandemic and see why you should option the ASEAN region.

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The pandemic has severely limited regular routines for SMEs around the world. However, there are still many things individuals can do from home to support their business during the coronavirus crisis. See which steps you can take from home to foster growth during this time.

The post Best of 2020: Our top 10 most popular international business articles from the past year appeared first on Trade Ready.

I’ve learned a lot of lessons from over a decade of observing the efforts of senior trade development professionals, combined with research that included trade mission/show follow-ups, interviews with SME exporters, and extensive conversations with foreign government trade development officials.

One of the most important is that all of these sources revealed a critical gap in export market entry.

Canada’s SME exporters still mainly rely on the traditional “push” export approach, which involves selecting a potential market, building and launching a market entry strategy, and attempting to penetrate a new market.

However, the vast majority of potential buyers, as well as Canada’s international competitors, transitioned many years ago to a “pull” procurement approach.

Buyers prefer to purchase from local suppliers who offer fast delivery, local invoicing, and produce service and warranty.

Exporters using the pull approach, rather than trying to force their way into an established and usually highly competitive market from afar, take a longer term view and become part of the local supply chain that allows them to instantly identify opportunities and pull any good or service from head office.

In contrast, the typical SME export approach is to focus on managing risk and guaranteeing ROI over the near term. This is most easily accomplished by a simple push approach that relies on selling goods into markets without a previous invitation or request, and doing so with the minimal risk or expense.

But with service exports or services integral to product exports like software, licensing, R&D, custom design and fabrication, etc. becoming an increasingly important part of international trade, companies lacking the ability to provide these services are falling behind. As more countries require a certain percentage of local or domestic involvement, many companies not already in those markets are immediately excluded. And if a buyer is looking for a supplier, they will often find several local options and limit their search to those options, rather than expanding their search further to international options.

I suggest that the focus on push exporting goods and systematically excluding other potential exporters not using the pull approach is the primary cause of why Canadian SMEs export less than SMEs in many of Canada’s primary trading partners.

By encouraging more businesses to set up local presences in international markets, new doors will open for them and their exports should increase as a result.

How pull procurement tilts the odds towards businesses with a local presence

The pull approach is nothing new and has been in common use by international competitors and large Canadian exporters for decades, but has largely been ignored by most SMEs.

The fundamental success factor in any pull application requires only that SME have an established presence in the target country that allows them to identify, quantify and access opportunities from inside that market.

They can then pull goods, services and value-added intellectual property in as required. This presence can take several forms, and is almost always much lower cost than trade missions or even trade shows.

So why does pull work so much better than push? Put simply, suppliers are easy to find in any given market: they advertise, have websites, are often members of highly effective international trade promotion groups, focus exclusively on getting product into the hands of buyers, and compared to buyers are relatively few in number.

In contrast, buyers are much greater in number, do not advertise, and the vast majority rarely, if ever, attend trade shows. But more importantly, procurement has changed and now often focuses on services or service-intensive goods that demand a local presence. In addition, the vast majority of buyers depend on local supply chains, either by preference or to comply with local regulation or procurement contracts, as mentioned above.

This puts buyers (pull) in control of the procurement relationship. With the entire world and often literally thousands of suppliers to choose from, the chance a buyer will find one specific seller is low.

How does this play out in real-world examples?

Our international market research in 15 countries has shown that most of Canada’s SME competitors have been using a “pull” approach since at least the mid-1990s. In many markets they have dominated and have effectively shut out push type export sales into these countries.

EDC has successfully used the pull approach on larger projects and foreign buyers for years, although despite their best efforts, this approach generally does not benefit the majority of SME firms as much as larger companies.

A clear example of the power of the buyer vs the supplier is a Latin American startup importer that easily identified and qualified providers and signed procurement and services agreements with over 30 suppliers in 14 countries (pull) in under 120 days. Over the next two years they grew to dominate their multi-million dollar national market, yet only one international exporter reached out to them (push) to carry their product.

Another recent example of the gap between push and pull exporters is a country actively trying to develop a new oil and gas services and support cluster, that offers excellent (potentially huge) opportunities and facilitated access to market for significant numbers of Canadian SME.

While these opportunities are obvious, easy to identify and quantify, and offer immediate revenue generation, over the past two years dozens of Canadian firms have visited this country on push type trade visits, but to date few, if any, have achieved meaningful success.

One reason is obvious: local content procurement regulations systematically eliminate push exporters, and direct procurement towards registered local pull type providers who must meet minimum local supply and service levels.

How can I take greater advantage of buyers using a pull approach?

Any effective approach must address the gap between SME needs to manage risk and provide a low cost, facilitated market entry, as well as recognize the constraints of the offshore buyers and their requirement to operate within their supply chain as pull importers.

Unfortunately, while simple and inexpensive, this is not as easy as it should be. Any SME can do it on their own, but very few will, so it usually comes down to developing a group (shared risk/cost) approach.

The most successful examples are where industry groups and associations, usually working with various levels of government engage private sector consultants who are subject matter experts in the various industries and have a strong understanding of the local and target country markets. These consultants can then package export investment opportunities and present them in a format that is easy to understand and promote.

The generic approach that has been observed to offer a success rate of well over 50% for each opportunity identified is to:

1. Assess the target sector. Identify strategic operational areas in services and value added supply chain where there is a demonstrated need that is expected to grow strongly for at least 5 years.
2. Identify the ideal profile of the target SME firms they would need to attract.
3. Review the local operating environment with respect to constraints that could restrict trade and develop effective solutions before these constraints become problems.
4. Develop a comprehensive business case on each opportunity with sufficient detail to allow an SME to make an informed decision.
5. Where possible, partner with the provincial and federal government trade promotion agencies and various industry associations to promote it to their members and constituents, as this can sharply reduce the cost of any due diligence.

The post Try this approach to improve the number of export opportunities available to your business appeared first on Trade Ready.

Tapping into new international markets presents growth opportunities for businesses of all sizes and yet, as of January 2018, only about 15 percent of Canadian SMEs were engaged in global trade.

Businesses seeking to succeed in global markets face many business problems, especially in navigating this quickly evolving and complex trade environment. Scaling up your small business to do business globally presents its own unique challenges.

“If you’ve been looking at going global you probably already know what you need to do, but crucially, do you or your team know how to do it? In business, if you don’t have the know-how to go global, you’ll give your profits to someone else,” according to Caroline Tompkins, President and CEO of FITT.

Which begs the question, why go it alone?  Many businesses who are entering the international market add a certified global business expert to their staff, either through hiring or upskilling existing employees.

For small business, entering global markets is a significant undertaking, and like any undertaking, it requires know-how, and developing or securing that know-how will require an investment of time and money.

So, in practical terms, what’s the value to small business of investing in trade know-how?

Who better to ask than our own Certified International Trade Professionals (CITP’s) who run their own global businesses?

We wanted to learn more about their own journeys to global trade, so we asked our CITP’s how global trade training and the CITP designation helps them to grow their own small businesses.

The Saddle Up Management Company – Scott C. Ferris, CITP

Scott C. Ferris is CEO of The Saddle Up Management Co., a global trade expert and a business development professional, based out of PEI, Canada.

Scott established The Saddle Up Management Company after spending his career in a mix of public and private sector engagements. His experience with international trade covers a wide range of areas including marketing, communications and business development.

Scott has more than 25 years experience in export sales planning, domestic and international business development, investment attraction, multi-sector communications, marketing campaign development, negotiations and partnership engagement as well as client engagement and membership development.

His domestic and international experience stems from participating on and organizing more than 30 trade missions on four continents.

We asked Scott to tell us more about his business, and how his CITP|FIBP designation has shaped his career and his experiences.

What problem does your business solve, and how?

We help company owners stay focused on what they do best and provide expertise in customer profiling, market intelligence and lead generation, empowering them to grow and expand into new markets.

How is your business involved in global trade? ​

Our work is focused exclusively on global market expansion, helping clients research, strategically plan and enter new markets.

How has FITT training/ know-how contributed to the success of your business? ​

FITT training expanded on my practical experience, broadening my knowledge across all facets of international trade. It has directly impacted my ability to help clients as I am more aware of the complexities of global trade and can work with clients across the complete spectrum of global business development.

Why was getting the CITP designation an important decision for you or your business? ​

For me personally, the CITP designation is testament to the skills and knowledge I possess and that my abilities have been recognized by the leading organization in international trade. I confidently then leverage this as proof of my capacity to help clients. Furthermore, the CITP has connected me to a global network of professionals I can call upon for additional assistance at any time. That is a very powerful resource to have at one’s disposal.

What is one of your secrets of success?

As a recent entrepreneur, I have made a purposeful decision to work with clients who equally have a real passion for what they are doing. In business, we recognize we need to profitable to survive, but money isn’t everything and doing something for the true love of it is a real defining characteristic. I love to work with people who love what they are doing and have realized some great success with this approach so far.

What advice would you share with other entrepreneurs as they begin their journey?

Believe in yourself. Be prepared to improvise and adapt but always be ready to overcome challenges. There will be many, but believing in yourself means you can conquer anything. ​

The post CITP Small Business Spotlight – The Saddle Up Management Company appeared first on Trade Ready.

Let’s face it. You know why you want to go global – to increase your bottom line. And you know how to increase the bottom line by selling more and spending less. If you’ve been looking at going global you probably already know what you need to do, but crucially, do you or your team know how to do it? In business, if you don’t have the know-how to go global, you’ll give your profits to someone else.

The vision to take your business global needs to be considered in the context of ensuring you have the necessary know-how, both in-house and through your suppliers and advisors, so that you’re prepared to take advantage of the opportunities while mitigating and minimizing the risks.

Taking your product or service global can grow your business. But regardless of how good your offering is, without trade capable people success will be harder and riskier than it needs to be.

For SMEs, entering global markets is a significant undertaking, and like any undertaking, it requires know-how; and developing or securing that know-how will require an investment of time, and money – proving once again that there is no such thing as a free lunch.

The solution isn’t always in additional staff, it’s in empowering your current team

The good news is that documented evidence proves when companies sell to more than one foreign market they are more profitable, grow faster, and are more resilient to economic downturns. These days, the dynamics of trade are more and more complex, and therefore the need to invest in upskilling employees to develop international business know-how has never been more important.

The bad news is that if you are not yet in a position to invest in doing a deep-dive into learning the intricacies of trade or ensuring your employees have the know-how, your company may not be trade ready. A lack of employee readiness can negatively affect your bottom line.

After making the decision to go global, upskilling your employees is the next best decision you’ll make to help your bottom-line, increase retention rate and client satisfaction, and improve productivity.

I’m not a product of my circumstances. I am a product of my decisions.

— Stephen Covey, Author, 7 Habits of Highly Effective People

It is critically important because the functions within your company will now be international, often a huge shift from domestic operations, and your employees will need to know how to take on these new responsibilities.

Whether or not a solid marketing plan supports entering into a new market, or if you’re in a position to react to a request from an international customer, you need to determine all the costs associated with moving across national borders. Do you know how to navigate currency fluctuations and how to protect yourself against them? Can you ensure your product complies with all market regulations and is not held up at the border?

Further, by being involved in the international functions of your company your employees will also begin to play a more strategic role for you. They will help you make decisions that affect the way your company invests, how it grows, and how it competes. The people working in a company that is global help drive international trade growth, rather than just serving to support the company’s growth.

In international business, know-how is survival

International trade is not for the faint of heart, it is for those who are willing to put in the time and investment to ensure risk is mitigated and minimized so that profits can be maximized. If you expect it to happen without an investment of time and effort, it won’t.

Well-trained employees will contribute to your successes and will help you make the right decisions that will grow the company. Knowing the lower limit that your export price can be, and the additional export expenses that will be incurred, will help you determine whether the initiative is financially viable. Planning for successful international transactions will help you determine in the cost of entering a market is too high.

Unfortunately, employee upskilling is not often a priority for SMEs. It tends to be one of those areas that are cut when times or tough or when there is so much going on that upskilling is put on the “some-day” list. We often hear how companies just do not have the time or the resources to invest in the upskilling of employees.

The truth is, if you want to go global, you must invest. Even micro businesses will need to find the time to invest in building their global know-how because it will be even more challenging to follow through on international trade initiatives without it.

In international trade, know-how is survival. And while the decision to trade or not to trade involves many factors, the bottom line is that you will need competent people. You will need people who can recognize international trade opportunities, and who will know how to act on them.

You CAN go global successfully – with the right tools

Trial and error learning just shouldn’t cut it for your business. It’s not always about more people – but about more productive people – and giving them the tools to grow your business globally with you. There is formal and informal training that you can incorporate into your business culture.

Spread the training out among the different roles and interests of your key players. Have your accountant take a course on conducting cost and pricing analysis, or how to obtain financing. Have a manager look into how to assess and create a risk mitigation plan. Have your marketing lead look into market entry strategies or how to sell to international markets. Or, get a FITTskills post-secondary student to create your international business plan, or market research analysis.

And check out the Canada Job Grant to offset the financial costs of training. Having trade competent people to rely on means fewer mistakes, increased efficiencies, and ultimately, increased sales.

When a company is seeking someone to balance their books they go to an accountant. When they are developing a business contract, they go to a lawyer. So, when a company is looking at international trade as a growth strategy, why not go to an international trade expert? Or better yet – create these experts within your existing teams by empowering your employees to learn what they need to know to help you go global.

Companies that make the decision to up-skill their employees will be at the forefront of continued growth in international trade, and it will drive results.

The founder of a company is an expert in what they do, but they are not necessarily an international business expert. When those two experts come together – that’s when they can go global.

— Zeeshanali Fazal, CITP, Account Manager, Export Development Canada

Building the internal capacity to support export initiatives does include having the right product/service, the right price for the market, and the right plan. But part of that plan must include international business talent development – whether for yourself or your staff. It is the critical building block of a go global strategy.

The post Going global requires a serious investment in know-how – there is no free lunch appeared first on Trade Ready.

Such firms are not necessarily large businesses—many small to medium-sized Canadian enterprises (SMEs) are discovering that investing abroad can have many benefits, including:

• Getting better access to foreign markets
• Increasing sales and market share
• Serving customers better
• Joining new global and regional supply chains
• Gaining access to new technologies and resources
• Reducing vulnerability to downturns both in Canada and internationally

Investing abroad: the basics

There’s no one-size-fits-all approach to CDIA, but in general it includes some or all of the following steps.

A word of caution first, though: foreign investing is complicated, so you should always obtain assistance from reputable experts throughout the process.

Consulting professionals in your target market is especially important, since they will be familiar with local investment, legal and tax requirements and can help you avoid expensive mistakes.

1. Decide whether CDIA is for you:

CDIA may or may not be a good bet for your business even if you’re already exporting. Ask yourself questions such as: Does it fit my international business strategy? Do I have the resources to set it up and sustain it? Does its potential outweigh the risks involved? If the investment isn’t a good idea, now is the time to find out.

2. Find the best market:

If you’re already doing business in a particular market, investing there may be the logical next step. If you’re looking to invest in a new market, research it very carefully and, as mentioned earlier, consult local experts about its foreign investment climate. Some countries encourage incoming investment but others can be less hospitable.

 3. Choose your investment approach:

Three of the most common approaches to CDIA are as follows:

• You set up a foreign affiliate by establishing a new business in your target market. Depending on your company, this could be as modest as a small sales office or as ambitious as a full-scale manufacturing plant. Regardless of size, the affiliate is wholly owned by your Canadian firm but operates as a local company with respect to regulations, laws and taxes.
• You acquire a foreign business. To do this, your company invests in the foreign firm by purchasing its shares and/or assets. To qualify as CDIA, however, the investment has to be large enough to give you significant influence over the foreign company’s activities. If you acquire 100 percent of the foreign company, of course, you have complete control over its operations, and have effectively acquired a wholly owned affiliate without building it from the ground up.
• In a merger, you establish or already have an affiliate in the target market. You then combine that business and a local company into a new firm that owns the resources of both companies. Both the original businesses disappear and your new firm continues as their successor. As with an acquisition, the new business functions as a wholly owned affiliate of your Canadian parent company.

4. Choose your investment and carry out due diligence:

At this point, you decide where to put your money—into an affiliate, for example, or into merging with or acquiring a local company. Before going ahead, though, you absolutely carry out due diligence. This can range from financial and credit checks to looking at local foreign-investment rules. Again, professional help will be indispensable.

5. Make your investment:

This is where you sign contracts and pay out money. The importance of getting the contract right can’t be over-emphasized, since it will help you avoid difficulties that can range from language issues to tax problems.

You should also be aware that the way contracts are negotiated in North America or Western Europe can be very different from the way it’s done in other cultures.

For both these reasons, you’ll need trusted local counsel to help you manage the process successfully.

6. Protect your investment:

Whenever you have assets in another country, you’re implicitly accepting some level of risk. You can reduce this by careful planning and scrupulous due diligence, but there may still be residual hazards that are out of your control. You can protect yourself against them by using various types of insurance, which can cover risks ranging from expropriation to breach of contract.

Want to learn more about investing abroad? Watch a video with me and Dominique Bergevin, and then visit EDC’s Invest in Foreign Markets pages.

Have you ever invested abroad? In which markets did you invest, and what was your experience? Share below!

The post Six steps to investing abroad appeared first on Trade Ready.

Though trade wasn’t initially on Katherine’s radar, working in a role with an international focus had been her goal from the very start. It was this goal that facilitated her transition to the world of trade, shifting her career path in an exciting new direction.

“I hadn’t considered trade at the start of my career. During my studies in International Development at the University of Ottawa, I worked in a student placement at the Canadian Council on Africa. It was a great fit because of my interest in international work, but more importantly it was my first introduction to the world of trade and its role in promoting sustainable economic growth. Since then, most of my roles have revolved around this idea of bridging international trade and development.”

After graduating, Katherine held several positions in the Canadian government, including the Africa Bureau of the Canadian Department of Foreign Affairs, and served 6 months in Nepal working on landmine issues and livelihood programmes in local communities.

In 2014, Katherine returned to the world of trade by joining TFO Canada (Trade Facilitation Office of Canada) as a Project Officer in their Trade Information Services team. TFO Canada’s mission is to reduce poverty by helping small and medium-sized enterprises (SMEs) in developing countries export to Canada. Building the export capacity of SME producers helps to spur economic growth and development in local communities, so the role was a natural fit for Katherine, combining her interests in international development and trade.

“In the field of international development, you need to have an area of focus and technical skills to show what specific value you can offer. I chose to specialize in international trade, which has opened a lot of doors for me.”

Katherine (far right) Meeting with TFO Canada’s Advisory Council of trade representatives from developing countries.

Getting a clearer picture of the mechanics of trade

As part of her specialization in trade, Katherine decided to take the FITTskills courses. The experience not only expanded her knowledge, but also helped her to think about trade in new ways, improving her ability to help clients worldwide.

“When I joined TFO Canada, I knew that I needed to learn more about trade in order to better serve our clients in developing countries. I was able to take the FITTskills courses online, which enabled me to go through the material while I was working full-time.”

While some training programs are more theoretical, the FITTskills courses gave me real insight into the nuts and bolts of how trade actually gets done.

“I gained a much clearer picture of how goods move through a supply chain, how trade transactions are financed, and what risks and challenges businesses face internationally. I was able to speak with more confidence using a trade vocabulary.”

“The International Trade Finance course was my favourite because it was the topic I knew the least about. Finance was something I had taken for granted, without really thinking about its impact on trade transactions. Thinking about payment terms, liabilities, bills of lading, and all the other complexities of trade finance is critical, especially because access to credit is one of the main obstacles to trade for the SMEs I am working with. I was able to apply what I learned right away.”

Katherine was sponsored for two FITTskills courses by OWIT Ottawa (Organization of Women in International Trade), through a partnership with FITT and Export Development Canada to promote trade training amongst women in Canada. She is now a member of OWIT Lake Geneva, where she coordinates high-level panels, events, and receptions with UN, NGOs, private sector and women’s groups.

Helping businesses succeed in Canada

Since completing the FITTskills courses, Katherine has been able to apply what she learned to better serve SMEs from developing countries. A project she had a particularly strong impact on was producing a Guide on Exporting to Canada as well as conducting market research on key sectors for TFO Canada’s clients. She also supported TFO Canada’s export capacity building programmes, including developing training materials for workshops in the field and hosting SMEs at Canadian trade shows.

“Trade shows are where the magic happens. It is a real ‘all hands on deck’ experience, with our staff at TFO Canada supporting companies with logistics, booth displays, product selection, and matchmaking with potential buyers in Canada. The goal is both to familiarize companies with the Canadian market, and to provide real business leads based on where the Canadian market is moving.”

A transatlantic move to the United Nations

In 2016, Katherine moved to Geneva, Switzerland to complete her MBA at the University of Geneva in a programme specialized in International Organizations. Shortly after beginning this program, she applied for her elite Certified International Trade Professional (CITP®|FIBP®) designation.

Having the designation is an easy way to show that I have skills, knowledge and expertise in international trade. It adds business credibility to the work I do in development, because companies know that I understand their business and the day-to-day challenges they face.

“I am also seeing the designation listed as a preferred qualification in job postings, so it is well recognized in today’s competitive job market.”

Katherine hiking the Swiss Alps to the famous Matterhorn (Toblerone) mountain.

While completing her MBA program, Katherine joined the International Labour Organization (a United Nations agency) working on monitoring and evaluation for a factory training programme in developing countries. To date, the programme has reached over 1,100 SMEs and 270,000 managers and workers with trainings to improve business competitiveness and working conditions.

“SME training is a pre-cursor to exporting and participating in global value chains. It’s becoming more competitive than ever to do business internationally, and global buyers are putting pressure on their suppliers to improve both productivity and labour standards. SMEs need to make sure they’re ready to meet those expectations.”

“We’re helping SMEs to modernize and improve their business and management practices, as well as ensuring that workers have a voice in the company and can contribute positively to improvements. A lot of what we do focuses on improving manager-worker relationships and creating shared benefits through decent work in SME factories.”

As she continues to deepen her trade expertise in this rewarding direction, Katherine looks forward to helping more SMEs, especially women-owned businesses, to develop the knowledge and management skills needed to excel in in global markets.

The post Katherine McGregor, CITP|FIBP – SME Development, International Labour Organization appeared first on Trade Ready.

Jonathan Steblin, CITP|FIBP, is a Trade Commissioner at the Pacific Regional Office of Global Affairs Canada located in Vancouver, BC.

He first gained an interest in pursuing a career in international trade through his experience working on the front line at the Canada Border Services Agency (CBSA).

No better place to learn challenges of global business than the border

“Working with CBSA was particularly beneficial in understanding the practical challenges that many SMEs face when trying to trade across a border.”

After almost four years as a student border services officer at the CBSA, Jonathan got his first big global business opportunity when he was invited to join the Department of Foreign Affairs and International Trade (now Global Affairs Canada), as a co-op student in trade policy in 2013.

He was well-qualified for the position, having earned a B.A. in Political Science and French from the University of British Columbia and a Master’s degree in Public Administration from Carleton University. Jonathan was promoted to the position of Trade Commissioner in June, 2014.

Focusing on the innovation, science and environmental stream of studies, I was given the flexibility to conduct research on various topics, from the Canadian biofuel industry to the management of non-renewable resource wealth.

“Completing my Masters of Arts in Public Administration at Carleton University provided me with the opportunity to gain sector knowledge in clean technology before becoming a Trade Commissioner.”

Making all the right connections

In Jonathan’s role as a Trade Commissioner responsible for clean technology in Canada’s regional network, he works with Canadian SMEs to facilitate their entry into new markets through the Trade Commissioner Service’s network of more than 160 trade offices around the world.

Daily, he works head-to-head with partners in other departments of the government, as well as private sector associations, to look for ways they can work together to better support his clients.

“A typical day for me includes responding to requests from new and existing companies for assistance with their business development, attending in person client meetings to gain a better understanding of their good or service, and arranging B2B opportunities for Canadian businesses to sell those products abroad.”

Beyond providing insightful support and assistance to his existing clients, Jonathan also works toward bringing in new clients through targeted outreach programs designed to help even more SMEs discover the benefits of the T.C.S.

“I also support the development of domestic outreach programs for senior officials in the department who have planned travel to British Columbia and Yukon.”

Jonathan enjoys that his position as a Trade Commissioner sometimes brings opportunities to travel and network representing the T.C.S., and also learn more about the broader impacts of trade policies around the world.

My role has given me the opportunity to complete a temporary work assignment with the Consulate General of Canada in Seattle, in order to prepare for several events important for the departments advocacy priorities.

“One highlight of this experience was being able to manage the Canada booth at the National Conference of State Legislatures Legislative Summit. This conference included over 5400 attendees from across the United States and 22 other countries and provided the excellent opportunity to gain experience on how trade issues impact broader foreign policy objectives.”

Offering the best service means getting the right tools

As a Trade Commissioner, Jonathan was motivated to complete the FITTskills training to ensure he could offer the highest level of practical knowledge and expertise to his clients. He completed the program through an instructor-led program in 2016.

“The FITTskills instructor was very flexible and encouraged questions, allowing us to learn from their knowledge, but also incorporate the knowledge of their peers in the classroom.”

Jonathan found practical aspects of the course material to be especially helpful in offering the best advice to his clients looking for guidance with logistical issues.

“The FITTskills courses were interesting and condensed a lot of useful information into relatively small textbooks. Some of the information that has particularly improved my current service offering to clients were the practical issues faced by actively trading SMEs, such as required documentation, administration authorities and INCOTERMS.”

Upon successfully completing the FITTskills program, Jonathan didn’t hesitate in applying for the elite CITP®|FIBP® designation.

I decided to pursue the CITP®|FIBP® designation as it was a great way to highlight my credibility in serving companies entering global markets.

“I am very optimistic that the CITP®|FIBP® designation will be useful in my career advancement. It is widely recognized throughout Global Affairs Canada, and in today’s increasingly competitive workforce there is a real benefit to obtaining professional certifications to strengthen future job applications.”

Jonathan’s hard work and experience certainly seems to be paying off for him in his promising career with Global Affairs Canada, and for his clients, getting the support they need to go global for the first time. If you are a small business owner considering expanding into new markets, he may be just the person to help you get there.

The post Jonathan Steblin, CITP|FIBP – Trade Commissioner, Pacific Regional Office appeared first on Trade Ready.

Amazon is the biggest online marketplace outside of China. It is also the ecommerce platform with the largest global footprint.

Many companies of all sizes are using Amazon to reach more customers online. There are more than two million third-party sellers on the Amazon marketplace worldwide, generating about 50% of Amazon’s total sales.

When merchants think about Amazon, the first thing that comes to mind is using the platform to increase sales through their massive audience. Of course, Amazon is a great channel to do that, but for small businesses Amazon can offer a lot more.

For SMEs who are just beginning to explore international markets, Amazon provides the tools and support they will need to succeed. These tools, such as Fulfillment by Amazon (FBA), greatly simplify the operational and financial processes required for international selling.

Solving the warehousing headache for SMEs

My husband has run a small international trade and marketing business in Canada for over seven years. Last year, he decided to expand to the U.S. A critical step was finding the right warehouse to store and ship products –a simple enough task. He never would have predicted what a big headache this would become.

He knew he needed a warehousing partner with strong technological capabilities, yet most of these providers were orientated towards serving businesses with huge volumes.

By contrast, FBA is remarkably accessible to small merchants, all the while providing first-in-class technology.

It allows SMEs to ship their goods directly to Amazon, which will store the goods in their warehouses and ship them for you directly when customers order them. Compared to many third-party fulfilment services, FBA is affordable, scalable and efficient.

Amazon currently operates in 11 global marketplaces: United States, Canada, Mexico, the United Kingdom, Germany, France, Italy, Spain, Japan, China and India. There are over 100 Amazon fulfilment centers worldwide. If you are planning to expand your local business into one of these markets, Amazon can help you get started.

You can gather market intelligence quickly with Amazon Global Selling

We’re all aware of how complicated international business can be. Apart from fulfilling your orders, considerations such as import taxes, customs duties, currency exchange, regional regulations, language barriers and local cultures can all add more complexity to selling your products in international markets.

For small businesses with capital constraints and lower risk tolerance, Amazon’s Global Selling, combined with FBA services, allow them to enter a new market and test out products with minimal investment and risk.

Before you make the decision to enter a target market, you must conduct some market research to ensure your product is sellable in the region.

Amazon Global Selling is stepping in to help companies find the information they need to sell to the right markets.

“Sellable” often means your product is in compliance with the target country’s regulations and specifications, but that’s not enough. Say you’re a North American manufacturer of electronic devices, and you decide to sell your products in Japan. You re-work your existing products to meet Japan’s electrical specifications, only to discover there is no demand for that product in the region.

Are you selling customers what they want?

“Sellable” means that, in addition to compliance, there must be consumer demand in the target market. This is where Amazon can help you ascertain whether your product is sellable or not by providing valuable market intelligence on a wide range of product categories. For example, you can search by keyword to see the best sellers in specific product categories. You can also drill down to look at customer reviews to better understand which product features local customers prefer.

It is often difficult for a small business to know which products customers truly want. Testing different designs only yields meaningful results if the sample size of the customer base is large enough to be statistically significant, yet that’s rarely the case at the small business level. This challenge is further compounded when a small business attempts to enter a foreign market.

This is where Amazon’s massive scale creates a special opportunity. Amazon gives small businesses access to enough customers that they can test new designs to discover what the market really wants. In the past, only large companies such as multinationals had the research budgets to collect this type of intelligence, but now such information is at the fingertips of even the humblest merchants.

Amazon helps set your pricing too

Amazon’s global marketplace also helps you select the right price for your products in each market. Apart from taxes, duties, currency exchange and cost of living in the target country, you also have to consider the cost of shipping, returns and customer support. All of these will affect the profitability of your products in the target marketplace. Thus it is often hard to determine what the right price is for your products in a new international market.

By using FBA, you can easily calculate the fulfilment fees, including storage, picking, packing, shipping and returns. By adding these costs to your product cost and comparing your estimated price to similar products in the target market, you can determine whether or not you will be profitable at your target price.

You can also test your price on Amazon by observing if customers are buying. If the customers are buying at the set price you can set your product price accordingly for other channels in the target market.

Manage your inventory more efficiently with Amazon Multi-Channel Fulfillment

After you have entered an international market successfully, you may decide to expand your business into channels other than Amazon. You may get sales orders from your own website, other third-party online platforms, catalogue sales, distributors or sales agents. You can utilize Amazon’s Multi-Channel Fulfillment service, which is an optional FBA feature, to help you manage your inventory and fulfil customers’ orders from other sales channels.

Amazon will fulfill your sales orders from the same inventory pool and handle customer returns the same as sales directly from Amazon.

This will save you the trouble and operational costs in managing cross-channel inventory so that you will have a more efficient and cost effective central distribution point.

In addition, Amazon also provides customer service in the language of the target marketplace to handle customer inquiries about your FBA orders. This represents a significant cost savings, as it can be very expensive for small businesses to hire additional local staff to handle customer service.

Amazon promotions can help you take care of marketing online

We all know how important marketing and promotion is in selling, especially when entering a new market where there is no brand recognition for your products. It is very hard to generate organic search results and improve your Search Engine Optimization (SEO) when you are new to the market.

Instead of paying big money to marketing consultants, you can use Amazon’s affordable promotional tools as a cost-effective way to build brand awareness of your product in a new country.

Just as SEO is essential for on-line marketing, Amazon’s search ranking is equally important. Amazon ranks products according to its own algorithm, which is a combination of sales volume and customer reviews, so it’s important for companies to do what they can to improve their visibility within Amazon search results.

Amazon’s promotional tools, such as Free Delivery, Money Off, Buy One Get One, and Pay-per-Click Ads, are invaluable. These tools enable you to run promotions for your products when you first list them and your search rankings are low.

Now it’s your chance to get started in a new market

Although there is no guarantee of success, there are many benefits of using Amazon Global Selling and FBA to get a head start in a new market.

The free market intelligence will make you familiar with the target market trends and demands, and the predictable and low overhead will reduce your operational costs and ensure profitability. The scalability will mitigate some risks of capital investment, while the customer service and automation of picking, packing and shipping will free you up to focus on growing your business. Amazon’s promotional tools will also help you build brand awareness in your new market.

Are you planning to expand your small business internationally? Why not get started on Amazon?

The post Use Amazon Global Selling and Fulfillment to expand your small business appeared first on Trade Ready.

The second view suggests taking a holistic approach by managing domestic and international business as an integrated whole and considering both, in tracking the overall success—and value—of the enterprise.

There is no single correct model.

The first approach is particularly well suited to situations where a company evolves gradually from a domestic start-up to a viable venture to a credible business and then decides to explore international markets and options for expansion beyond comfortable domestic borders.

This model of gradual international expansion, however, is more likely to be the exception than the rule in today’s highly globalized business environment. Companies in knowledge industries, such as information and communications technology (ICT), biotechnology, professional services and others, tend to look at global opportunities very early in their lifecycles.

Evolving models of global sourcing, the increasing interconnection between trade and foreign investment and the increasing momentum of outsourcing and offshoring all combine to motivate companies to look beyond domestic borders—early and often—as attractive opportunities beckon, or powerful competitive forces compel. The issue is now less a matter of choice and more a matter of necessity.

What are the main strategies for a strong banking relationship?

Whether a company adopts the integrated model or the structure that delineates along domestic and international lines, there is a parallel debate about the nature of a financial institution or banking relationship for organizations seeking to do business internationally.

In some markets, banking relationships are “for life,” whereas in others, banks and companies alike take a very “transactional view,” looking at each proposed deal on its own merits.

Should a company—even a SME—consider keeping domestic banking and trade/international banking relationships separate, with different financial institutions?

Generally, and based on the traditional trade finance instruments, an importer is more restricted in decisions related to banking relationships. This is because a credit relationship has to be in place to enable the granting/provision of a trade finance product, which is typically based on an existing line of credit. Importers are generally restricted to dealing with banks where they maintain an account relationship.

Exporters, on the other hand, are much freer to select the bank they may wish to do business with, provided that the bank is able and prepared to transact under the trade finance instrument agreed on between the importer and the exporter, and provided that the role envisioned for that bank is acceptable to it.

The exporter could, in theory, change banks for every transaction. Perhaps more practically, an exporter could select banks based upon their risk tolerance (and/or pricing) in certain markets, or based upon industry or sector-level specialization at the banks, which can prove valuable to an exporter.

Should I stay or should I go?

Bankers will point out that there are also advantages for exporters that remain with their primary relationship banks in working through export transactions. It is true that the primary bank is more likely to act in the interest of an established client (as long as the bank’s other responsibilities in the transaction are not compromised).

It is equally true, however, that the expertise and capabilities required for a particular transaction may simply not be available through the primary bank, or that the bank cannot support business in a given market due to its own risk assessments or credit limitations. Determining factors will often be the country risk a bank is prepared to accept and the price charged for that risk.

Large corporate entities and multinationals can maintain a dozen or more core banking relationships across various geographic markets, even by industry vertical, given that banks do have specializations.

However, for SMEs, the question of how best to approach banking relationships is an important one. A bank’s willingness to finance or facilitate trade finance transactions will often depend on its understanding of the company’s entire business, and a smaller company that is expanding internationally may need to choose its banking relationships carefully.

Take a closer look at your bank’s priorities before making a final decision

A fundamental truth is that a healthy and positive relationship with a bank or financial institution can be a lifeline for a small business. There are risks to maintaining an integrated banking relationship: the bank could, for example, take possession of current account deposits to offset an expected loss on an export finance transaction where the importer has become insolvent; the benefits of building a strong, trust-based relationship with a financial institution over time must be carefully weighed.

“Shopping” the business to other banks can be beneficial in terms of securing lower pricing, but again, the benefit of establishing a strong relationship may be worth the occasional premium in bank charges.

The final answer is that the best model depends on the priorities of the company and the practical realities of dealing with bankers in a given market. Some banks claim to be SME-oriented, others try to be, and some succeed fully, and both sides of the equation—the client and the bank—matter.

Banks are under ever-increasing regulatory pressure to understand their clients’ business, and to be able to demonstrate that understanding at the level of individual transactions. This ongoing challenge for banks, arising from anti-money-laundering and anti-terrorism measures, as well as from numerous spectacular financial failures, will make banks hesitant to take on new clients without knowing the business well, first.

Banks that fail to demonstrate that they have undertaken appropriate due diligence to meet the Know Your Customer (KYC) standard can incur significant financial penalty.

Ultimately, the decision about the most effective banking relationship structure may come down to a combination of factors—the company’s objectives and requirements, together with the banks’ obligations.

The post Build the best banking relationship for your trade finance needs appeared first on Trade Ready.

In the last 25 years, the odds of an older person being a millionaire have improved slightly. For young people, however, the odds have become much worse.

These figures come from a new paper by economists at the Federal Reserve Bank of St. Louis’ Center for Household Financial Stability, which shows evidence of a growing wealth gap that few people are talking about – the gap between the young and the old.

The paper, by William Emmons, Bryan Noeth and Ray Boshara, draws on surveys of 40,000 families that the Center carried out between 1989 and 2013 to examine the all-important role that your age plays in how much income you make, and how much wealth you accumulate. It offers a few clues as to how young people can game the system and end up like their wealthy older counterparts, as well as a lot of evidence to show that things are different for young people today.

In my opinion, if the “wealth gap” is this pronounced in the U.S., one of the few economies that continues to create new jobs, one can imagine what it is like in places like Europe and the Middle East, where economies are stagnating and youth unemployment is particularly evident.

While this dire situation exists, the globe is chock full of opportunities for wealth creation. As explained in the 2014 McKinsey Global Trade Institute Report, many of these are directly from or connected to global trade, whether it’s with North America, Europe, Asia, South-South trade, etc.

How SMEs can be included in global growth through e-commerce

E-Commerce is one of the newer and most accessible avenues for business people from all walks of life to participate in global trade and grow their wealth and sales.

Walmart has 250 third party vendors on its e-commerce platform. Amazon and Alibaba are tremendous vehicles for the sale of third party products on their sites. Unilever has seen the value of selling in China through TMall, though they do not sell through Alibaba. Mondavi, Costco, and P&G are just a few of the American companies which sold their products through Alibaba on Singles Day. On this one day alone in 2016, Alibaba achieved sales of $14.3 billion.

I have not heard one U.S. politician whisper a peep about e-commerce as an avenue for small business engagement in global trade.

The ramifications in regard to inclusion, economic egalitarianism, wealth-building, economic growth and job-creation are all too obvious. Politicians prefer to dwell on the dark side of globalization. This is because, despite Bill Clinton’s iconic quote “It’s the economy stupid” holding true in the political arena, ignorance too often trumps the audacity of hope.

Go global to access new opportunities for wealth

In order to build new wealth, what the world’s youth clearly needs is a crash course in international trade and trade finance, pardon the pun. The traditional solution is that of “certified financial advisers,” CFAs who provide ideas about savings and investment.

The problem with that “solution” is that the majority of CFAs have no idea how to capitalize on global trade opportunities, much less how to teach youth about what will be the greatest future source of wealth-creation. In this incapacity, CFAs are joined by economists and consultants who are largely ignorant of international trade, and international business in general. They are in no position to be advising anyone about the acquisition of wealth, and certainly not advising countries on how to grow.

Joseph Stiglitz, the Nobel Prize winning economist, noted that “much of America’s inequality is the result of market distortions with incentives directed, not at creating new wealth, but at taking it from others.” When it comes to markets, “Wall Street” is great at shock and awe, but this hardly benefits “Main Street”. Can nations create wealth without men, as Lincoln wrote, “wringing their bread from the sweat of other men’s faces?” They can!

We all realize that there is a need for a new direction, but first the leaders and the next generation of business professionals have to be educated to take it.

Global trade, more than manipulating stocks and financial markets, will create new jobs, opportunities and wealth across the nation, yet too many professionals do not feel ready or trained for it. Whether through e-commerce or more traditional solutions, today’s youth need to be ready to buy, sell and expand worldwide if they want to achieve the same financial success as generations before them.

“If you want to build a ship, don’t drum up people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” ~ Antoine de Saint-Exupéry

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