dfait step by step guide to exporting

7/27/2019 DFAIT Step by Step Guide to Exporting

1/54

The Canadian Trade Commissioner Service

Everywhere you do business

STEP-BY-STEP Guide TO EXPORTING

2011

This document may not be fully accessible. For an accessible version, please

visit http://www.tradecommissioner.gc.ca/eng/guide-exporting.jsp
http://www.tradecommissioner.gc.ca/eng/guide-exporting.jsphttp://www.tradecommissioner.gc.ca/eng/guide-exporting.jsphttp://www.tradecommissioner.gc.ca/eng/guide-exporting.jsp


2/54ForeignAFFAirsAndinternAtionAltrAdeCAnAdA step-by-stepguidetoexporting

AcknowledgmentsSomeTipswereadaptedfromtheCanadianTrade

CommissionerServicepublicationExpand Your Horizons

SomePitfallswereadaptedfrommaterialfromExport

DevelopmentCanadaExportMythswereadaptedfrom

ExportingBasicsbyMauriceKogonDirectorCentrefor

InternationalTradeDevelopmentElCaminoCollege

TorranceCAUSA

disclAimer

Thisinformationistobeconsideredsolelyasaguideand

shouldnotbequotedasorconsideredtobealegalauthority

Itmaybecomeobsoleteinwholeorinpartatanytime

without notice

ISBNFR-7/E-PDF

Catalogue No.: 7---44-

AbouttheguideTheStep-by-Step Guide to Exportingisintendedtohelpyou

learnabouttheworldmarketplaceandhowyourcompanycan

dobusinessthereItconcentratesontheoverallprinciples

ofexportinganddescribestheprocessesthatbusinesses

commonlyusetodevelopexportstrategiestailoredtotheir

needsAmongotherthingstheguidewillhelpyou

Assessyourcompanysexportreadiness

Buildanexportplan

Researchandselectyourtargetmarket

Createanexportmarketingplan

Determinethebestmethodsofdeliveringyourproduct

orservicetoyourtargetmarket

Developasoundfinancialplan

Understandthekeylegalaspectsofinternationaltrade

GettingreadytodobusinessoutsideCanadaisacomplex

undertakingButthebasicprinciplesofexportingarequite

straightforwardandthousandsofCanadianfirmsofallsizes

andinallsectorshavelearnedtousethemsuccessfullyWith

carefulplanningandasolidcommitmenttobecominganexporteryourcompanycanjointhemintheglobalmarketplace

PleAsenote

TheinformationprovidedintheStep-by-Step Guide to

ExportingisgeneralinnatureToensurethatyourparticular

needsaremetalwaysconsultspecialistssuchasthe

tradecommissionersofthera off f F

Affa a iaa ta caaa

aa

--- toll free in Canada and the United States

-- in the National Capital Region and outside

Canada, or call a Canada Business Network Information

Officer at ---.

S t e p - b y - S t e p G u i d e t o e x p o r t i n G

Prepared for:

FAaaiaataCaaa

T is ocument may not e u y accessi e.

For an accessible version, please visit

http://www.tradecommissioner.gc.ca/eng/guide-exporting.jsp.
http://www.tradecommissioner.gc.ca/http://www.tradecommissioner.gc.ca/eng/guide-exporting.jsphttp://www.tradecommissioner.gc.ca/eng/guide-exporting.jsphttp://www.tradecommissioner.gc.ca/



S t e p - b y - S t e p G u i d e t o e x p o r t i n G

Contents

.gettingstArted:Ayepa

eg

Aa?

evalagal

4 Sccachlgvaa

aalsss

eqz 4

.globAliZAtion:lkgaVaCha 6

Aglalza 6

usagGlalValChas 6

thgwhGlalVal Chas 6

4 GlalValChasaCaaas 6

GlalValChasasss

.chArtingYourroute:dvyepa 8

Whla? 8

tha 8

blgha 8

4 thlmsla 8

.settingout:iytaMak

4 usagaalmaksach

4 thsmaksach

.reAchingthecustomer:dvyeMaksa

usagmakglas

thmapsaalmakg 4

blgmakgla 4

4 Sgcs

pm

6 Makgls 8

.oPeningthedoor:eytaMak 9

6 usagsags 9

6 rgsag 9

6 Mhsmak 9

64 evalagsmas

6 Slcghghma

.shiPPersAndshiPPing:dvhg 4

iaalaglas 4

eclaas 4

ems

4 dlvgcs

Fghwasaks

6 packggs 6

Lalsamaks 6

8 tasasac 6

9 ecma 6

dala l

dlvgsvcs 8


4/54



C H A p t e r

gettingstArted

Ayepa

11 eXPortingWhas

CanadahasalwaysbeenatradingnationExportsandimports

consistentlyaccountforabouttwo-thirdsofthecountrys

grossdomesticproduct(GDP)Astheliberalizationofglobal

commercecontinuesmoreandmoreCanadiancompanies

arejoiningtheinternationalmarketeveryyear

Wh w a cma ha aa wwh Caaa c cm a ?th a va a, c:

Increasedsalesifdomesticsalesaregoodexportingisaway

toexpandyourmarketfindforeignnichemarketsandtake

advantageofdemandaroundtheworld

Higherprofitsifyoucancoverfixedcoststhroughdomestic

operationsorothertypesoffinancingyourexportprofitscan

growveryquickly

Economiesofscalewhenyouhavealargermarketbase

youcanproduceonascalethatletsyoumakethemostof

your resources

Reducedvulnerabilityifyoudiversifyintointernationalmarketsyouavoiddependingonasinglemarketplaceand

sufferingfromadomesticdownturn

Newknowledgeandexperiencetheglobalmarketplace

aboundswithnewideasapproachesandmarketing

techniquesthatcouldalsoprovesuccessfulinCanada

Globalcompetitivenesstheexperienceyourcompanygains

internationallywillhelpkeepyoucompetitiveintheglobal

marketplaceandinCanada

Domesticcompetitivenessifyourcompanysucceedsinthe

globalmarketplaceitwillensureyourresiliencewhenfaced

withforeigncompetitioninCanada

e ha ma cha, cam hm hh ca aa a a. Am h cha a:

Increasedcostsyoumayhavetomodifypackagingoryour

productsorservicesandaccountforshort-termcostssuch

asextratravelproductionofnewmarketingmaterialsand

additionalstafftoadapttomarketsabroad

Levelofcommitmentittakestimewillingnesseffortand

resourcestoestablishandmaintainyourselfinforeignmarkets



Stayinginforthelonghaulwhileexportingholdsgreat

economicpromiseformostcompaniesmonthsoreven

severalyearscanpassbeforeyouseeasignificantreturn

onyourexportinvestment

Languageandculturaldifferencesfamiliarizeyourselfwith

thedifferencesinlanguagecultureandbusinesspractices

soyoudontinadvertentlyoffendyourpotentialcustomerandloseasale

PaperworktheresnowayarounditbothCanadianand

foreigngovernmentsrequirealotofdocumentationfrom

exportersofproductsandservices

Accessibilityyouhavetobeeasilyavailabletoyour

foreignclients

Competitionyoumustbesureyourethoroughlyfamiliar

withthecompetitioninyourtargetmarket

SourceAdaptedwithpermissionfromtheForumforInternationalTrade

TrainingGoing Global

FindinghelP

FmhscsahCaaabsss

wsavalalawwwcaaaca/

///

thCaaataCmmssSvcws

alsvsscsacacmahl

sssswhcsllg;makgsag

ma;maks;acg;

amaks

Lamawwwacmmcca

eXPortinggoodsversuseXPortingservices

eggsagsvcss

qchallgsthmmsalwh

ackaggcsmsahscallvaml

whlhlacssssschaswkms

calvalalagagaavlam

hmakWhggssalsmammhahsasvccm

hashlaca(sallaag

svcwaac)

Lamawwwwca

12 Are You reAdY?

Anexport-readybusinessisonethathasthecapacityresource

andmanagementtodeliveramarketableproductorserviceon

aglobalscaleatacompetitivepriceThetrickistodetermine

whetherthisistrueofyourcompanyandifitisnthowtomake

ithappen

y s s s hk a hscs a kwlg sssala has. Cs h llwg as a sag .

y ca hav:

Clearandachievableexportobjectives

Arealisticideaofwhatexportingentailsandthetimelines

forresultsAnopennesstonewwaysofdoingbusiness

Anunderstandingofwhatisrequiredtosucceedinthe

internationalmarketplace

Hr qm hav:

Thecapacitytohandletheextrademandassociated

withexporting

Seniormanagementcommittedtoexporting

Efficientwaysofrespondingquicklytocustomerinquiries

Personnelwithculturally-sensitivemarketingskills

Waysofdealingwithlanguagebarriers

Faca a a c ca :

Obtainenoughcapitalorlinesofcredittoproducethe

productorservice

Findwaystoreducethefinancialrisksofinternationaltrade

Findpeopletoadviseyouonthelegalandtaximplications

ofexporting

Dealeffectivelywithdifferentmonetarysystemsandensure

protectionofyourintellectualproperty

Cmv hav:

Aproductorservicethatispotentiallyviableinyour

target market

Resourcestodomarketresearchontheexportability

ofyourproductorservice

Provensophisticatedmarket-entrymethods
http://www.canadabusiness.ca/eng/105/165/http://www.canadabusiness.ca/eng/105/165/http://www.tradecommissioner.gc.ca/http://www.exportwise.ca/http://www.exportwise.ca/http://www.tradecommissioner.gc.ca/http://www.canadabusiness.ca/eng/105/165/http://www.canadabusiness.ca/eng/105/165/



exportMytH

im ma a

n, ! t scc aal maks,

hav a g m. ts hsas small

a mm-sz Caaa cmas wh gsals w $30,000 a $5 mll a cl

g a a g v wll.

13 evAluAting Your eXPortPotentiAl

Ca c vc a whwhmak Caaa?

AnsweringthisquestioniscrucialIftheresnodemandforwhat

youreofferingitwouldbeunwisetoproceed

tip

Scal vs lk smas a sss akass

ca cll s m h

ls c wh g.

blw a sm csas ak acc wh aalzg h al cs/gs svcs.

Cm

Whoalreadyusesyourproductorservice?

Isyourproductorserviceinbroadgeneraluseorlimited

toaparticulargroup?

Isyourproductorservicepopularwithacertainagegroup?

Arethereothersignificantdemographicpatternstoitsuse?

Whatclimaticorgeographicfactorsaffecttheuseofyour

productorservice?

pc mca

Aremodificationsrequiredtomakeyourproductappeal

toforeigncustomers?

Whatistheshelflifeofyourproduct?Willthisbereduced

bytimeintransit?

Canthepackagingbeeasilymodifiedtosatisfythedemands

offoreigncustomers?

Isspecialdocumentationrequired?Doesyourproducthave

tomeetanytechnicalorregulatoryrequirements?

taa

Howeasilycanyourproductbetransported?Wouldtransportationcostsmakecompetitivepricing

a problem?

lca a

Doyourequirealocalrepresentativeformarketingefforts?

Doproductsrequireprofessionalassemblyorother

technical skills?

Isafter-salesserviceneeded?Ifsoisitavailablelocally

ordoyouhavetoprovideit?Doyouhavetheresources

todothis?

e vc

Ifyoureexportingserviceswhatisuniqueorspecial

about them?

Areyourservicesconsideredtobeworld-class?

Doyouneedtomodifyyourservicestoallowfordifferences

inlanguagecultureandbusinessenvironment?

Howdoyouplantodeliveryourservicesinpersonwitha

localpartnerorbyelectronicmeanssuchastheInternet?

Caac

Willyoubeabletoservebothyourexistingdomestic

customersandyournewforeignclients?

Ifyourdomesticdemandincreaseswillyoustillbeable

tolookafteryourexportcustomersandviceversa?

14 science And technologYinnovAtion And internAtionAlbusiness

HistoricallyCanadasleadingexportshavebeennaturalresourcesandcommoditiesButinaglobalmarketplacediversifying

ourexportsintoscienceandtechnology(S&T)innovationis

essentialtomaintainarobustandadaptable economy

TheGovernmentofCanadahasestablishedS&Tdevelopment

asamajoreconomicpriorityforthefutureThisincludes

researchanddevelopment(R&D)andthetransferofS&T

innovationstotheglobalmarketAnoutward-lookingapproach



todevelopmentwillensurethatourexportershaveaccess

toleading-edgeresearchandwillultimatelyleadtoahigher

standardoflivingforallCanadians

TheCanadiandomesticmarketisrelativelysmallformany

advancedtechnologiesTheaerospacesectorforexample

cantsupportthefull-fledgedcommercializationofaservice

orproductdomesticallyFindinganinternationalmarketor

supplyingcompaniesinaGlobalValueChaincantherefore

beessentialtoanS&Tcompanyssurvival

Ifyourcompanyfallsintothiscategoryyouwillalmostinevitably

havetointernationalizeRememberthatinternationalizingcan

alsomeanR&Dcollaborationwithanoverseascompanyforming

aninternationalpartnershiporinvestinginaforeignbusiness

thatcomplementsyourown

15 eXPort QuiZ

A a?

i a a ? tak h qz, chck c a .

1. d hav h c caac avaa ca m ca ma c vc?

Yes/No

2. d hav h ac q aa c vc a maka m ?

AFinancingisinplace

BFinancingisbeingarranged

CNofinancingavailable

3. i maam cmm a ?

Yes/No

4. d m hav a ack c m a?

Yes/No

5. d maam hav aa c?

Yes/No

6. d c vc hav a ccmv avaa (qa, c, q,va) v cm amak?

Yes/No

7. Hav aa acka (a a/ ma maa) a mak?

Yes/No



8. d hav h caac a c v a-a a vc a mak?

Yes/No

9. d hav a F ba (Fob) C,

iac a Fh (CiF) c c, a a vc?

Yes/No

10. Hav ak a makach?

ACompletedprimaryandsecondarymarketresearch

includingavisittothetargetmarket

BCompletedsomeprimaryandsecondarymarketresearch

CNoresearch

11. Hav chck ca hch a a am aca wh c a mak wh ca (ip) h?

AMyIPstrategyincludesIPsearchesbeforeentering

new markets

BMyIPisregisteredinCanadaonly

CWhatisIP?

12. i ma maa avaa h

aa a mak? (b ca,ch, w)

Yes/No

13. Hav a mak c vc a mak?

Yes/No

14. Hav a h vc a aav//a, a

wh a ca m?Yes/No

15. Hav h a h wa cm k?

Yes/No

SourceAdaptedwithpermissionfromForeignAffairsandInternational

TradeCanadaBusinesswomeninTradeOnlineAssessment

howdidYouscore?

i slc A, asw ys

1115 qss, cgalas!

Youunderstandthecommitmentstrategiesandresources

neededtobeasuccessfulexporterAttheveryleastyouhave

thefoundationinplacetotakeontheworldandsucceed

710: n a

HoweverthereareweaknessesinyourexportstrategyItmay

bewisetoseekadviceandguidancefromgovernmentexperts

exportconsultantsortheinternationaltradebranchofyour

financialinstitution

Lss ha 7

Whileyoumaybereadytovisitfarawaylandsyoullneedto

domorehomeworkbeforeyouexportConsidergettinghelp

fromthesourcesmentionedinthischapter

tip

ta Cmmsss ca hl a

aal maks a assss h mak al c/gs a svc.



21 About globAliZAtionThetermeconomicglobalizationenteredintocommonusein

theearly1990sandreferstotherapidexpansionofinternational

tradeandcapitalflowssincethattimeTheeconomiesofthe

worldscountrieshavebecomemorecloselyintegratedthan

everbefore

Globalizationhascausedmanybusinessestodividetheir

productsorservicesintocomponentsSoinsteadofproducing

thecomponentsthemselvesorobtainingthemfromdomestic

suppliersbusinessesoutsourcecertainaspectsofthework

toothercountriesEconomistscallthisnewco-dependency

aGlobal Value Chain (GVC)

22 understAnding globAl vAlue chAins

Avaluechain(whetherglobalornot)consistsofactivities

thatbringagoodorservicefromitsconceptiontoitsend

useandbeyondThisincludesdesignproductionmarketing

distributionandsupporttothefinalconsumerTheactivities

thatcompriseavaluechaincanbecontainedwithinasinglefirmordividedamongdifferentfirmsWhenthoseactivitiesareno

longercontainedwithinasinglegeographiclocationsuchas

acountrywehaveaGlobalValueChain

GVCsarentnewTradeandinvestmentwerebecomingbroadly

internationalizedinthelate19thandearly20th centuries

ButwiththeoutbreakofWorldWarIfollowedbytheGreat

DepressionandtheSecondWorldWarglobalizationdidnt

reallyresumeuntilthelastquarterofthe20th century

Internationaltradehasevolvedfromcompanieswho

manufactureproductsinonecountryandselltheminanother

Itisalsodepartingfromthebranch-plantapproachwhereina

businessproducesitsgoodsinaforeignmarketandsellsthem

almostexclusivelyinthatmarketInsteadinternationaltradeis

nowincreasinglycharacterizedbyintermediateinputs(forboth

goodsandservices)whoselinksmaybeanywhereintheworld

FormoreinformationvisittheOfficeoftheChiefEconomists

websiteatwww.aal.gc.ca/cms-cms/

.as

23 the growth oF globAlvAlue chAins

Accg h ofc h Checms, h a h maj csvg h gwh GVCs.

2.3.1 dc c aa

Unlesstimeconcernsdictateotherwisecompaniescanafford

tomovetheirgoodsandservicesinlocationsthatofferthebest

competitiveadvantages

2.3.2 imv ma a cmmcach

Advancesininformationandcommunicationtechnologies(ICT)

meanthatcompaniesaremuchlesslimitedbydistancewhen

operatinginforeignmarkets

2.3.3 rc a a a vm

Newbilateraltradeandinvestmenttreatieslowerglobal

tariffsandliberalizedeconomiesindevelopingmarketssuch

asChinaandIndiahaveallowedcompaniestogainaccessto

marketsthatwereformerlyclosedtothem

24 globAl vAlue chAins And cAnAdiAn eXPorters

GVCsalloweachlinkofthechaintospecializeinwhatitdoes

bestThisleadstogreaterefficiencyincreasedproductivityand

lowerconsumerpricesforhigher-qualitygoodsandservices

Atthesametimethistradeenvironmentstimulatestheintense

globalcompetitionthatencouragesinnovation

Companiesworldwidehavehadtoadaptwiththeevolutionof

GVCsForexamplenon-coreactivitiesmaybeoutsourcedto

supplierspartnersoraffiliatesincountrieswithlowerlabour

costsorothercompetitiveadvantagesAlternativelysmall

andmedium-sizedenterprises(SMEs)maysupplygoodsor

servicestoaGVCestablishedbyanothercompanyincluding

aforeign multinational

C H A p t e r

globAliZAtion

lkgaVaCha
http://www.international.gc.ca/economist-economiste/index.aspxhttp://www.international.gc.ca/economist-economiste/index.aspxhttp://www.international.gc.ca/economist-economiste/index.aspxhttp://www.international.gc.ca/economist-economiste/index.aspx



IngeneralCanadahasbeenreasonablysuccessfulatadapting

OurexcellentR&Denvironmentandhighlyskilledworkforce

togetherwithourlongexperienceasatradingnationhave

underpinnedthissuccessHoweverCanadawillnowhaveto

meetthechallengeofsupportingatechnologicallyadvanced

anddiversifiedeconomyCanadianbusinessescandothisby

creatingGVCsfortheirindustrysectorbyparticipatinginexistingchainsbymergingwithlargerfirmsorbyacquiring

othercompanies

25 globAl vAlue chAins And Your business

y hav a csal ag sags g m GVCs. th llwg a amg h

ms cmm:

2.5.1 pv a ma a va cha

Ifyourproductissomethingthatanothercompany(either

Canadianorforeign)usesasanintermediateinputyoumay

beabletolinkintotheirGVCbybecomingasupplierThisisa

verycommonapproachandcertainlythesimplestForSMEs

especiallythosewithnichetechnologiesorspecializations

newopportunitiesarecontinuallyemergingtosellto

multinationalsortheirsuppliers

2.5.2 dv w ga Va Chahh c

Ifyourcompanymanufactureseitherfinishedproducts

orintermediateinputsyoucansetupyourownGVC

Acquiringintermediateinputssuchasrawmaterials

componentssubsystemsandothergoodsandservices

fromforeignsupplierscanhelpyoumanufactureyour

ownproducts

2.5.3 u F dc ivm cc ah a ga Va Cha

Byinvestingabroadyoucangainimmediateaccesstoaforeign

marketandexpandyourcompanyssalesandpromoteits

growthThereisabroadspectrumofinvestmentapproaches

rangingfromthepassivetotheactive

YoumightforexamplejoinaGVCsimplybyinvestingina

foreigncompanywhiletakinglittleornopartinitsoperations

Purchasingaforeignfirmorsettingupajointventureor

partnershipisanotherwaytoincreaseyourcompetitiveness

inthelocalmarketThisapproachcanbeverycost-effective

ifyouobtainexistingproductionanddistributioncapabilities

thoughtheinvestmentanddontneedtobuildthemfromtheground up

Attheactiveendofthespectrumyoucouldestablishawholly-

ownedsubsidiaryinaforeignmarketThiscanhelpyoudrive

andbenefitfromtheGVCsofwhichyourcompanyisapart

Themostimportantadvantageisthatyouarentdependenton

apartnersoyoucancontrolthedirectionyoursubsidiarywill

takeYoualsohavedirectcontactwithyourendusersbuilding

solidcustomerrelationshipsandyouridentityisntobscuredby

thepresenceofapartnerFinallyyouroverseasstaffanswers

onlytoyouandalldatarelatedtoyourforeignoperationisat

yoursoledisposal

2.5.4 Fc vc c

TheservicesectorisopeningupallovertheworldEvenif

youreprimarilyamanufactureryoumaybeabletomoveupthe

valuechainbybranchingintovalue-addedservicesrelatedto

yoursectorsuchasdesigndistributionmarketingand logistics

Secondaryindustriesmayprovideadditionalopportunities

Companiesaredemandinganincreasingvarietyofservices

tofacilitatetradesuchasfinancialinformationprocessing

telecommunicationslogisticsandlegalservicesYourcompany

mayhavespecializedexpertisethatisdirectlyapplicableto

such activities

tip

F m ma s h ta Cmmss

Svcs Lkg i Glal Val Chas: A G

Small a Mm-Sz ess a

www.acmm.c.ca//vc/hm.j
http://www.tradecommissioner.gc.ca/eng/gvc/home.jsphttp://www.tradecommissioner.gc.ca/eng/gvc/home.jsp



C H A p t e r

chArtingYourroute

dvyepa

31 whY PlAn?

Ifyouplanyourexportprojectthoroughlyyoullhaveabetter

chanceofdoingwellinyourtargetmarketBadplanning(orno

planning)canleadtomajorfailureabroadandcouldseverely

damageyourdomesticoperationsaswell

Financialinstitutionsandotherlendingagencieswillnot

normallyprovidefundstoabusinessthatlacksawell-developed

exportplanInadditionpotentialpartnersandinvestorswill

wanttoseeexactlyhowyouplantoachieveyourobjectives

i sh, ll g wh wh a la. ths cha wll hl ca .

exportMytH

e cmca

rmm, hav vhg sl.

os s ca mal s ,

vsas csms, maag sals s, hal

awk a lv h gs.

32 the FoundAtion

y sss la

AgoodexportplanbeginsathomeNowisthetimeto

reviewandrenewyourbusinessplanifitisoutofdateIf

youdonthaveonethisisdefinitelythetimetocreateone

Formoreinformationonpreparingbusinessplansgoto

www.caaasss.ca/g/125/

tip

Cac s assca ams

sccssl g cmas wh ca v

wh accal avc.

33 building on the FoundAtion

y la

Onceyouvepolishedupyourbusinessplanyoucanstart

creatingyourexportplanItisntsomethingyoullfinishina

weekthoughandevenafteryouvebegunexportingyoull

needtoupdateitregularly

34 the elements oF Your eXPort PlAn

Anexportplanisabusinessplanthatfocusesoninternational

marketsItidentifiesyourtargetmarket(s)exportgoals

necessaryresourcesandanticipatedresults

y a h ca h w:

1. ic

Businesshistory

Visionandmissionstatements

Purposeoftheexportplan

Organizationalgoalsandobjectives

Internationalmarketgoals

Shortandmedium-termobjectivesforexporting

Locationandfacilities

Itiscriticaltounderstandyourmarketandthemajorocusoyourbusinessbeoreyouentertheinternationalmarketplace.

CanadaExportAwardWinner
http://www.canadabusiness.ca/eng/125/http://www.canadabusiness.ca/eng/125/



2. oaza

Ownership

Management

Staffing

Levelofcommitmentbyseniormanagement

Relationshipbetweenexportingandotheroperations

Corporateexperienceandexpertiseinexporting

Strategicalliances

Labourmarketissues

3. pc a vc

Descriptionofproductsandservices

Keyfeatures

Adaptationandredesignrequiredforexporting

Productionofproductsandservices

Futureproductsandservices

Comparativeadvantageinproduction

4. Mak vvw

Marketresearch

Politicalenvironment

Economicenvironment

Sizeofmarket

Keymarketsegments

Purchasingprocessandbuyingcriteria

Descriptionofindustryparticipants

Marketshareheldbyimports

Tariffandnon-tariffbarriers

Industrytrendsandothermarketfactors

Marketoutlook

5. Mak a

Targetmarkets

Descriptionofkeycompetitors

Analysisofcompetitiveposition

Productpositioning

Pricingstrategy

Termsofsale

Distributionstrategy

Promotionstrategy/developmentofsalesleads

Descriptionofintermediariesandpartners

6. ra a ca

Intellectualpropertyprotection

Otherregulatoryissues

Modesoftransportationandcargoinsurance

Tradedocumentation

Useoftradeserviceproviders

7. rk ac

Marketrisks

Creditandcurrencyrisks

Politicalandotherrisks

8. imma a

Keyactivities

Evaluationcriteriaandprocess

9. Faca a

Revenuesorsourcesoffunding

Operatingbudget

Costofsales

Marketingandpromotioncosts

Otherexpensesorexpenditures



41 understAndinginternAtionAl mArket reseArch

Aftertheexportplanmarketresearchcanbethemost

importantcontributortointernationalsuccessThereareabout

190countriesintheworldandyouwanttotargettheright

one(s)foryourproductorservice

Todothisyouneedinformationthatwillprovideaclear

pictureofthepoliticaleconomicandculturalfactorsaffecting

youroperationsinagivenmarketMarketresearchisthekey

tounderstandingyouropportunitiesItcanconfirmthatan

opportunityactuallyexistsgiveyouinsightintohowanew

marketcanbedevelopedorhelpyoudiscoverwhatsimportant

toyourpotentialcustomers

th h ac aa makach, wh a, a acacm. th a:

s 1: sc a mak

Collectstatisticsrelatedtoyoursectorthatshowproduct

orserviceexportstovariouscountries

Identifyfiveto10largeandfast-growingmarketsforyour

productorserviceLookatthemoverthepastthreetofiveyearsHasmarketgrowthbeenconsistentyearoveryear?

Didimportgrowthoccurevenduringperiodsofeconomic

recession?Ifnotdidgrowthresumewitheconomicrecovery?

Selectsomesmalleremergingmarketsthatmaynothave

asmanycompetitorsasanestablishedmarket

Targetthreetofiveofthemostpromisingmarketsfor

further study

s 2: A a mak

Examinetrendsthatcouldinfluencedemandforyourproduct

orserviceCalculatetheoverallconsumptionofproductsorserviceslikeyoursandidentifytheamountimported

Studythecompetitionbothdomesticandnon-domesticLook

ateachcompetitorsCanadianandforeignmarketshares

Formarketingpurposesbecomefamiliarwithchannelsof

distributionculturaldifferencesandbusinesspractices

Identifyanyforeignbarriers(tariffornon-tariff)fortheproductor

servicebeingimportedintothecountryaswellasanyCanadian

barriers(suchasexportcontrols)affectingexportstothecountry

Searchforfederalprovincialorforeigngovernmentincentives

topromotetheexportoftheproductorservice

Takethetimetoexaminethelocalculture,ndouthowthingsaredonethereandadapt.Partotheprocessincludesndingtheright

localpartner.

CanadaExportLifetimeAchievementAwardWinner

C H A p t e r 4

settingout

iytaMak



s 3: daw Cc

Afteranalyzingthedatayoumaydecidethatyoushouldrestrict

yourmarketingeffortstoafewcountriesIngeneraloneortwo

countriesareusuallyenoughtostartwith

Withtheseconclusionsinhandyoucanbegintodevelopyour

marketingstrategy(seeChapter5)

SourceAdaptedwithpermissionfromWesternEconomicDiversificationCanadaREADY FOR EXPORT: Building a Foundation for a Successful Export Program

tip

b a aal ss mak sach,

c lachs a sal vss s mss

al s.

42 the tYPes oF mArket reseArch

th a ma was s a mak, h m al a jcv sach, h .

th a w ma mak ach,ca a ma.

4.2.1 sca ach

YoudothisinCanadausingdatasuchasperiodicalsstudies

marketreportsbookssurveysandstatisticalanalysesMany

oftheseareavailableonlineaswellasthroughchambersof

commerceeconomicdevelopmentorganizationsindustryand

tradeassociationsandCanadiancompaniesthatarealready

doingbusinessinyourtargetmarket

4.2.2 pma ach

Aftercompletingyoursecondaryresearchcollectmarketinformationthroughdirectcontactwithpotentialcustomersor

othersourcesPrimaryresearchalmostalwaysdemandsdirect

personalinvolvementthroughinterviewsandconsultations

Stateyourcompanysobjectivesattheoutsetandpresentyour

questionsclearlyForexample

cpay dpgiveabriefdescriptionofyour

companyitshistoryindustries/marketsservedprofessional

affiliations(ifany)andyourproductorservice

ojbrieflylistordescribeoneormoreobjectives

foryourplannedexportproductorservicebasedonyour

secondarymarketresearch

P sclearlydescribetheproductorservice

youwanttoexport

QbaseyourquestionsonyoursecondaryresearchandbeasspecificaspossibleYoullgetabetterresponseif

itsclearthatyouvecarefullyresearchedyoursubject

4.2.3 o c

caaa b

www.caaasss.ca/g/105/

TheexportsectionisahubfortheCanadianexportmarketand

includeslinkstomarketandsectorinformationtradestatistics

andsourcesoftradeleadsandpotentialpartners

caaa ta c swww.acmmss.gc.ca

Offersaccesstohundredsofmarketstudiesandcountry

reports

caaexp

www.caa.gc.ca

Anexcellentsourceforcurrentbusinessnewsmarket

informationupcomingtradeconferencesandtradeshows

exp dp caaa (edc)

www.c.ca

Offersanextensivelistofmarketresources

A-F ta s

(asub-siteofAgricultureandAgri-FoodCanada)

as-sa.ag.gc.ca

Awealthofmarketstudiesandcountryreportsforcompanies

intheagri-foodsector

exportMytH

i ca cm vathas cssal . i sss slls

mscall, wh wl csms aa?

rmm, c s h l sllg h

acs sch as , l, qal, svc a

csm as ca mak cmv.
http://www.canadabusiness.ca/eng/105/http://www.tradecommissioner.gc.ca/http://www.canadexport.gc.ca/http://www.canadexport.gc.ca/http://www.ats.agr.gc.ca/http://www.ats.agr.gc.ca/http://www.canadexport.gc.ca/http://www.canadexport.gc.ca/http://www.tradecommissioner.gc.ca/http://www.canadabusiness.ca/eng/105/



4.2.4 p a mak

Heresachecklisttohelpyousummarizewhatyoucan

learnaboutapossiblemarketAfteryouvecreatedtwoor

three profilescomparethemtoseewhichone(s)present

thebestoverallopportunities

1. Mak Is it:

Afullydevelopedmarket(CanadaGermanytheUS)

Adevelopingmarketwithrapidgrowth(ChinaIndia)

Adevelopingmarketwithmarginalgrowth(many

African nations)

2. pca hhhDescribe:

Thegovernment

Whoswho

Majorpoliticalthemes

RelationswithCanadaincludingagreements

3. ecmc hhhDescribe:

Thedomesticeconomy

Economictrends

Generalimportsandexports

ImportsandexportstoandfromCanada

4. b maSpeciy:

Thecurrency

Thelanguage(s)

Businesspracticesandregulations

Differencesinlegalframework

Governmentprocurementpractices

Workrelationships

Officehours

5. pa List:

Canadianfirmsdoingbusinessinthetargetmarket

Majorfirmsfromthetargetmarketdoingbusiness

inCanada

Optionsforlocalpartners

6. s mak- aIdentiy:

Industryassociations

Tradeeventsinthetargetmarket

Othernetworkingoptions

TrademediaResearchfacilities

Marketresearchsources

7. Ca caSpeciy:

Greetingsandformsofaddress

Dosanddonts

Culturaldifferences

AttitudestowardCanadians

Generaltips

8. tav Describe:

Visaworkpermitsorotherrequirements

Businesssupportservices

Suitablehotels

Telecommunicationsstandards

Tippingcustoms

Electricalvoltage

Religiousholidays



51 understAnding eXPortmArketing PlAns

Lg ll s ,

ll a makg la.Whileyouredevelopingitremembernottoconfuse

marketingwithadvertisingsalesor promotionMarketingis

strategyTheotherthreearethetoolsyourstrategywilluse

toreachyourtargetaudience

A mak a h a ach a aw h w q:

Whatarethecharacteristicsofyourtargetmarket?

Howdoyourcompetitorsapproachthemarket?

Whatisthebestpromotionalstrategytouse?

Howshouldyouadaptyourexistingmarketingmaterials

orevenyourproductorservice?

tip

blg sss lashs g maks s s

ac ac. Fas, h calls a mal shl

sv llw-.

C H A p t e r

reAchingthecustomer

dvyeMaksa

Treatallmarketsdiferently.Thereareculturaldiferencesouttherethatyouneedtorespect.

CanadaExportAwardWinner



52 the mAnY Ps oFinternAtionAl mArketing

Cmm a h mak ma, h Four Ps o Marketing c:

Pwhatisyourproductorserviceandhowmust

itbeadaptedtothemarket?

Pwhatpricingstrategywillyouuse?

Phowwillyoumakeyourcustomersawareof

yourproductorservice?

Pahowandwherewillyoudeliverordistributeyour

productorservice?

iaa a m cmca.

A h w p h c h 13 Ps o International Marketing:

Payhowcomplexareinternationaltransactions?

Pdoesyourstaffhavethenecessaryskills?

Pahaveyouplannedyourbusinessmarketaccount

andsalescalls?

Paphaveyoucompletedalltherequired

documentation?

Pahaveyouconsidereddifferencesinculturalandbusinesspractices?

Paphaveyouselectedapartnertocreatea

strongermarketpresence?

Pwhatareyourcurrentandplannedpolicies?

Phowwillyoubeperceivedinthemarket?

Phaveyouassessedtherisksandtakensteps

toprotectyourcompanyanditsintellectualproperty?

SourceForumforInternationalTradeTrainingGoing Global

tip

b a asla cms h lagags

h ag mak. C a al csms

wll aca .

53 building Your eXPortmArketing PlAn

y mak a a wk ha w hav m c. A v , c h w q:

Whatisthenatureofyourindustry?

Whoareyourtargetcustomers?

Wherearetheylocated?

Whatisyourcompanysmarketingstrategy?

Whatproductsorservicesdoyouplantomarket?

Howwillyoupriceyourproductsandservices?

Whichsegmentofthemarketwillyoufocuson?

Doesyourmarketingmaterialaccuratelyconveythequality

andvalueofyourproductsorservicesandtheprofessionalism

ofyourcompany?

Asforcontentagoodmarketingplaniscloselyrelatedtoyour

exportplanandshouldcontainthefollowing

ex aythepurposeofyourmarketingplanand

howyourobjectiveswillbeusedinyourexportstrategy

P aayacleardescriptionofyourexpor

productorserviceitsuniquesellingpointsandhowmarketable

itmightbeinternationally

ma aayyourtargetmarketskeyeconomicsocialpolitic

andculturalcharacteristicsaprofileofyourtargetcustomerbuyin

patternsandfactorsinfluencingpurchasing decisions

cp aaytodecidepricingandmarketing

strategiesofyourproductorservice

gahowyouwillachieveyourobjectivesintermsofmarket

sharepositionrevenueandprofitexpectations

ma aymarketingstrategyincluding

pricingrecommendationsmodeofdeliveryandproposed

promotional methods

ipaactivitiesandtargetdatesyoullundertaket

carry out your marketing plan, including a detailed marketing budge

eaaevaluateyourmarketingplanatvariousstages

todetermineifyourgoalsarebeingachievedandwhat

modificationsmaybeneeded

sayahalf-pagesummaryofyourmarketingplangoals

describinghowtheyfitintoyouroverallexportplan



tip

tak sfc m cllc ackg ma

h csm ma, h cmv lasca,

lcal m laws, csms qms a h

ma acs.

54 setting Prices

Strategicpricingisoneofthemostimportantfactorsin

achievingfinancialsuccessPartofsettingarealisticexport

priceandthereforeanappropriateprofitmarginistoexamine

productiondeliveryanddistributioncostscompetitionand

marketdemandYoushouldalsounderstandthevariablesof

yourtargetmarketandotherexport-relatedexpensessuchas

Currencyexchangeratesandfluctuations

Marketresearchandcreditchecks

Receivables/riskinsurance

Businesstravel

Internationalpostagecableandtelephonerates

Translation

Commissionstrainingchargesandothercostsinvolving

foreignrepresentatives

Consultantsandfreightforwarders

Productorservicemodificationandspecialpackaging

5.4.1 Mak ma

Asindomesticmarketsdemandinforeignmarketscanaffect

yourpriceInotherwordswhatwillthemarketbear?

Formostconsumergoodspercapitaincomeisafairlygood

waytogaugeamarketsabilitytopayPercapitaincomefor

mostindustrializednationsissimilartothatofCanadaorthe

UnitedStateswhileitismuchlowerfortherestoftheworld

Oftensimplifyingproductsorservicestoreducetheselling

pricemaybethebestoptioninlessaffluentmarkets

rmm ha cc vaa acaa. t accmma ccca a h cmaav va hCaaa a wh c.

ExportDevelopmentCanada(EDC)providesinformationon

managingforeignexchangeriskatwww.c.ca/glsh/_

_113.hm

5.4.2 Cm

Indomesticmarketsfewcompaniescansetpriceswithout

consideringtheircompetitorspricingThisisalsotruein exporting

Ifyouhavemanycompetitorsinaforeignmarketyoumay

havetomatchorundercutthegoingpricetowinashareofthe

marketHoweverifyourproductorserviceisuniqueornew

youmaybeabletosetahigherprice

5.4.3 pc a

Howwilleachmarketaffectyourpricing?Includeproduct

modificationsshippingandinsuranceinyourcalculationsAnd

asmentionedaboveyoucantignoreyourcompetitorspricing

RefertoyourmarketobjectiveswhensettingyourpriceFor

exampleareyoutryingtopenetrateanewmarket?Looking

forlong-termmarketgrowth?Orpursuinganoutletfor

surplus production?

Youmayhavetotailoryourmarketingandpricingobjectives

tocertainmarkets(egdevelopingnations)Thereareseveral

pricingstrategiesavailable

sa pchargingthesamepricetoallcustomers

Fx padjustingpricesfordifferenttypes

of customers

F -a pcoveringbothfixedandvariablecost

oftheexportsale

maa coveringonlythevariablecostsofproduction

andexportingwhileyoupayoverheadandotherfixedcostsout

ofdomesticsales

Pa pkeepingyourpricelowtoattractmore

customersdiscouragecompetitorsandgainquickmarketshare

ma pricingtheproducthightomake

optimumprofitamonghigh-endconsumerswhilethereis

little competition

Afteryouvedeterminedyourcostsandchosenyourpricing

strategyestablishacompetitivepriceforyourproductor

servicethatgivesyouanacceptableprofitmargin
http://www.edc.ca/english/need_to_18413.htmhttp://www.edc.ca/english/need_to_18413.htmhttp://www.edc.ca/english/need_to_18413.htmhttp://www.edc.ca/english/need_to_18413.htm



5.4.4 pc chck

Usethishandychecklisttotrackyourcostsanddevelop

yourpricingstrategy

Mak a m

Agent/distributorfeesAdvertisingmediarelations

Travel

Communications

Materials(brochuresbusinesscards)

Tradefairsandexhibitions

pc

Unitcostofmanufacture

Productorservicemodification

RegulatoryapprovalIncreasedR&Dcosts

Labelling/Packaging

Marking/Packing

dcma

Inspection

Certification

Documentpreparation

Cargoinsurance

Freightforwardersfees

taa

Ladingandrelatedcharges

Carriage

Warehousingandstorage

Insurance

Cm

Customs/importtaxes/dutiesatportofentry

Customsbrokeragefees

Fac

Costsoffinancing

Interestcharges

Exchangeratefluctuations

Exportcreditinsurance

SourceForumforInternationalTradeTrainingGoing Global

Thetablebelowoutlinessomeofthedifferences

betweenmarketinggoodsandmarketingservices

inanexport environment

Makggsvssmakgsvcs

Fac Fg Fsvc

dma Samlc psacaals

iamak Salssavs Fmscals

samak Makgc Makgmandsvcs

lcamakc Sals/sacl ofcvalfcagmak

iman

Caac pcsgaackagg isalamcs

lcaaca dssmaks Svcs

lcav tashws Ccs(assak)

Ma pcavsg psscvag

lcaa pc/sms ohsvcms

gvmcm Gsacqs Svcscacs



55 Promotion

th cm malsags ca mak ak v.

Inthiscontextpromotionreferstoanyorallofthecommunicationstoolslistedbelowthatyoumayuse

toconvincepeopletobuyyourproductorservice

Acarefullyselectthemediathathavea

widecirculationwithinyourtargetaudienceIffew

peoplehavetelevisionsisradioabetterbet?Orprint?

Oronline advertising?Orsocialmedia?Wordofmouth

promotion(testimonialssamplesetc)?

Pa aayoumayneedtoremoveelements

thatareinappropriateoffensiveormeaninglessinthetarget

marketThenhaveacommercialwriteradaptthesematerials

intothenativelanguageandhaveitdouble-checkedbya

nativeofthecountry

d aatargeteddirectmailcampaigncanbevery

effectiveifyoudoyourresearchandgainexperiencein

yourtargetmarket

maprepareamediakitthatincludesaprofileofyour

companynewproducts/servicesnewsworthyactivitiesand

anyarticlespublishedaboutyourcompany

Pa manyculturesvaluepersonalcontactasthe

bestmeansofpromotionandbuildingbusinessrelationships

ta attendingorparticipatingininternationaltrade

showsallowsyoutopromoteyourbusinesscheckoutthe

competitionanddomarketresearch

ibepreparedtocommittimeandmoneytokeeping

yourwebsiteup-to-dateusefultocustomersandmaintained

inotherlanguages

brAndingcAnAdAForAgri-FoodcomPAnies

iscmahaagclalsc?i

sshlkwaCaaabaiaal

agamvlAgclaAgF

Caaaclsashwhsavcal

gvmsthsavssglvag

Caaassgaalmagcash

salsalCaaaagcs

Fmmagwwwmaqcaaaa

acca//hm

tip

b cal lk h mags ha am

ca mag ma hav h ag mak.
http://www.marquecanadabrand.agr.gc.ca/intro/index-eng.htmhttp://www.marquecanadabrand.agr.gc.ca/intro/index-eng.htmhttp://www.marquecanadabrand.agr.gc.ca/intro/index-eng.htmhttp://www.marquecanadabrand.agr.gc.ca/intro/index-eng.htm



56 mArketing tools

dvlg h gh makgls s ccal h sccss sss. blw s a ls ls a

s g sa.b ca

Professionallydesignedandhighquality

Easytoread

Intheappropriatelanguage(s)

Consistentthroughoutyourfirm

Distinctiveandinformative

Up-to-dateandcompleteincludingareacodescountry

telephoneandfaxnumberspostalcodeemailand

website addresses

bch

Creativeandappealing

Informativeandeasytoreadhighlightingyouruniqueness

Professionallydesignedandprinted

Visuallypleasing

Cm ma

Demonstratethatyourcompanyishighlyrecommended

RepresentyourbestcustomersFeaturequotesfromtopexecutives

Includeinyourbrochureandonyourwebsite

nw ac

Clearlystatethatyourcompanyisarecognizedleader

Quoteinyourbrochure

Reproduceonyourletterhead

Displayinyouroffice

Sendtopotentialclients

V

Sophisticatedandinteresting

Professionallyproduced

Orientedtothequalityandbenefitsofyourproduct

orservice

Clearandconcise

Easilyavailable(egonyourwebsite)

WComprehensiveandinformative

Professionallydesigned

Easytonavigate

Visuallypleasing

Uptodateandreliable

Emailenabled

Capableofallowingonlinepurchasing

(ifappropriate)



61 understAnding entrYstrAtegies

dvlg a mak sag

sml mas g h s mhs lvg a sg gs.

Orifyoureexportingservicesitmeanssettingupwaysto

obtainandmanagecontractsintheforeigncountry

ForeignAffairsandInternationalTradeCanadahastrade

commissionersineveryprovincewhocanhelpyoudesignyour

marketentrystrategyOutsideCanadatradecommissioners

inmorethan150citiescanhelpyoudealwiththechallenges

ofmarketentry

Formoreinformationvisitwww.acmmss.gc.ca

6.2 reFining Your entrY strAtegY

yv chs h ms msgmaks c svc.

Nowbasedonyourmarketresearchyoumustdecidewhich

entrymethodbestsuitsyourneeds

sm ac c a:Howisbusinessconductedinyourtargetmarketand

industry sector?

Whatareyourcompanysexportstrengthsandweaknesses?

Whatisyourcompanysfinancialcapacity?

Whatproductorserviceareyouplanningtoexport?

Howmuchserviceandafter-salessupportwillyour

customers require?

Whattradeagreementsorbarriersapplytoyourtarget market?

63 methods oF mArket entrY

Thetraditionalmeansofmarketentryfallintofourbroad

categoriesdirect exportsindirect exportspartnershipsand

acquisitions/investmentsWellexamineeachoftheseandthen

lookatthequestionofintermediariesagentsdistributorsand

othergo-betweens

6.3.1 dc

ForproductsyoumarketandselldirectlytotheclientFor

servicesyounegotiatecontractandworkdirectlywith

the client

Aaa

Ahigherreturnonyourinvestmentthansellingthrough

anagentordistributorAllowsyoutosetlowerpricesandbemorecompetitive

Closecontactwithyourcustomers

daaa

Youdonthavetheservicesofaforeignintermediary

Customersorclientsmaytakelongertogettoknowyou

6.3.2 ic

Forproductsyoumarketandselltoanintermediarysuchas

aforeigndistributorYoucanalsoretainaforeignagentor

representativewhodoesnotdirectlypurchasethegoods

Forservicesyoucontractwithanintermediarywhothen

negotiatesandcontractsonyourbehalf

Formanynewexportersanintermediarymaybethebest

waytoenteramarket

C H A p t e r 6

oPeningthedoor

eytaMak

Itsveryimportantornewexporterstopartnerwithsomeonewhosamiliarwiththelocalbusinessculture.

Exporter
http://www.tradecommissioner.gc.ca/http://www.tradecommissioner.gc.ca/



6.3.3 pah

Youmightfinditadvantageoustopartnerwithalocalcompany

whosestrategicpositioncomplementsorenhancesyourown

Awell-structuredpartnershipcanbenefitbothpartiesinthe

followingways

Yourpartnercancomplementyourcapabilitiesandprovidethelocalexpertiseinsightsandcontacts

Eachcompanyfocusesonwhatitdoesandknowsbest

Bothpartnerssharetherisk

Youcanpoolideasandresourcestohelpkeeppacewith

change

Youcanapproachseveralmarketssimultaneously

Yourpartnermayprovidetechnologycapitalormarket

accessthatyoumightnotbeabletoaffordonyourown

Partnershipsmayhelpresolveproblemsrelatedto

professionalaccreditationmovementofpersonnelacrossbordersandtaxandlegalstatus

Inahighlycompetitiveglobalmarketcombiningthetechnical

andfinancialstrengthsoftwobusinessescanmakeboth

more competitive

y v a ah a h :

1 DecidewhetherornotpartnershipcanworkforyouIf

yourneedscanbesatisfiedin-houseapartnermaynotbe

necessaryIfyouneedfinancingyoumaybebetterofflooking

forinvestorsButifyourequirespecialexpertiseoralocal

marketpresencethenapartnershipmightworkverywell

2 Definetheformstructureandobjectivesthatapartnership

musthavetosuityourneedsTodothisevaluateyour

companysgoalsitsabilitytoachievethemandwhereyou

needhelpindoingsoThenidentifyhowthepartnership

mustworkinordertofillinthosegaps

3 Findapartnerwhomeetsthesecriteriaandwhowillbea

goodfitwithyourcompanyItisveryimportanttoselect

apartnerthathasvaluesandanapproachtobusinessthat

matchyourownforapartnershiptobesuccessful

th a va m ah. th maj a:

lalicenseisthegrantofrightstoanotherbusiness

sothatitcanlegallyuseyourproprietarytechnologyand/or

intellectualpropertyThisusuallydoesnotinvolvegrantingall

therightstotheproperty



Famorethanlicensingthefranchiseeisgiventhe

righttouseasetofmanufacturingorservicedeliveryprocesses

alongwithestablishedbusinesssystemsortrademarkswhose

useiscontrolledbyalicensingagreement

c-eachfirmlicensesproductsorservicesto

theotherforsalespurposes

c-afaatypeofcross-licensinginwhich

companiesagreetomanufactureeachothersproducts

c-acarriedoutonthebasisofafeeora

percentageofsalestotakeadvantageofexistingdistribution

networksanddomesticmarkets

c-pthejointproductionofgoodsenablingyour

businesstouseitsskillsandresourcestoprovidecheaper

manufacturing

J eachbusinesscontributescapitaltoanewlycreatedcorporationthattheyoperatetogetherorthe

Canadianandthelocalbusinessenterintoageneralpartnership

agreementandoperatethejointventureasapartnership

u h aw, acca,ak a h a va mawh a ah.

Allpartiesmustbeabsolutelyclearonwhoholdswhichrights

andwhichresponsibilities

tip

pla allacs call a a a h

qalcas a g ag s.

6.3.4 Acq a vm

Apartnershipisnttheonlywaytotapintotheresourcesof

aforeigncompanyAcquiringafirminyourtargetmarket

ormakingasubstantialinvestmentinitcanachievethesame results

Youimmediatelygainaccesstothelocalmarketaswellas

patentsandotherintellectualpropertyresourceavailability

accesstocapitalspecialistexpertiseproprietarytechnology

andproductdifferentiation

Youmayalsoenjoyloweroperatingandproductioncostsin

yourforeignoperationthanathome

workingAbroAd

essvcsshlawahsal

assssssvlvwkgsCaaa

FgAasaiaaltaCaaalshs

agcallWorking Abroad: Unravelling the Maze

llsvcsaallmsahwalwhhm

rwwwvacca/ca/wkaa_

avaaa

6.3.5 s vm

Foreigngovernmentscanpresentarichsourceofcontracts

forexportersTheUnitedStatesgovernmentaloneprocures

morethan$500billioningoodsannuallyCanadaBusiness

providesinformationonhowtonavigateforeigngovernment

procurementincludingservicestohelpyoubesuccessfulat

www.caaasss.ca/g/0/5/

TohelpCanadasbusinessesselltothesecustomersthe

federal governmentestablishedtheCanadianCommercial

Corporation(CCC)aCrownCorporationthatactsas

Canadasinternationalcontractingandprocurementagency

Toassistwiththenegotiationandexecutionofcontracts

theCCCsignsonecontractwiththeforeigngovernment

buyerandtheotherwiththeCanadianexporterTheCCCensurestheconditionsoftheagreementandtransmitsthe

contractualobligationsdowntotheCanadianexporterThe

resultisasecuregovernment-to-governmentcontractwith

thebestpossibletermsandconditionsforallconcernedIn

additionCCCmanagesthecycleofpaymentsfromtheforeign

governmentbuyertotheCanadianexporter

CCCalsospecializesinmanagingcontractswiththe

US DepartmentofDefenseandNASA

FormoreinformationrefertotheCCCwebsite

atwww.ccc.ca.

YouropportunitiesforsellingtotheUSgovernmentarent

limitedtodefenceandaerospaceofcourseForadetailed

explanationofUSgovernmentprocurementandhowyou

maybeabletotakeadvantageofitvisitForeignAffairs

andInternationalTradeCanadasSELL2USGOVwebsite

atwww.aal.gc.ca/sll2sgv
http://www.voyage.gc.ca/publications/work-abroad_travail-etranger-eng.asphttp://www.voyage.gc.ca/publications/work-abroad_travail-etranger-eng.asphttp://www.canadabusiness.ca/eng/90/895/http://www.ccc.ca/http://www.international.gc.ca/sell2usgovhttp://www.international.gc.ca/sell2usgovhttp://www.ccc.ca/http://www.canadabusiness.ca/eng/90/895/http://www.voyage.gc.ca/publications/work-abroad_travail-etranger-eng.asphttp://www.voyage.gc.ca/publications/work-abroad_travail-etranger-eng.asp



64 evAluAting use oFintermediAries

Beforeyoujumponaplaneandstartknockingondoorsthink

aboutusinganintermediaryTherightonecansaveyouan

enormousamountoftimeandmoneyThereareseveraltypes

agentsrepresentativestradinghousesanddistributors

6.4.1 A a av

AgentsandrepresentativesarentexactlythesameAn

agentsecuresordersfromforeigncustomersinexchangefor

acommissionArepresentativespecializesinsaleswithina

specificgeographicarea

Bothmaybeauthorizedandcommissionedtoenterinto

contractualsalesagreementswithforeigncustomersonyour

behalfThisisusuallylesscostlythansettingupyourowndirect

salesoperationSuchanarrangementalsogivesyoucontroloverthepriceofyourproductorserviceanimportant advantage

Goodforeignagentsorrepresentativescanresearchmarkets

adviseonfinancingandtransportationoptionscleargoods

thoughcustomsprovideaccesstopotentialcustomersmake

collectionsandsupplyinformationonlocalbusinesspractices

lawsandculturaltraditions

tip

d lgc a al ag sav mak s h wll all sv

ss aml, ha h a shg

a clsv lash js k c

svc h mak. Cs gag a

al .

6.4.2 ta h

Trading houses aredomesticintermediariesthatmarketyour

goodsorservicesabroadAfull-servicetradinghousehandles

agreatmanyaspectsofexportingsuchasmarketresearch

transportationappointingdistributorsoragentsexhibitingat

tradefairsandpreparingadvertisinganddocumentation

Someactasprincipalsorexportmerchantsbuyingproducts

outrightfromCanadiansupplierswhileothersactasagents

sellingoncommission

Ifyouprefernottoselldirectlytoforeigncustomersorworry

aboutfindingaforeignintermediaryyoumightconsiderusing

atradinghouse

tip

ta g ags ss as as

a qals msc s chals.

6.4.3 F

Unlikeagentsdistributorsactuallypurchaseyourproduct

orserviceandresellittolocalcustomersOftentheysetthe

sellingpriceprovidebuyerfinancingandlookafterwarranty

andserviceneeds

Abonusisthatthedistributorcanusuallyprovideafter-sales

serviceintheforeignmarketOntheotherhandusingaforeign

distributormayreduceyourprofitmarginsandresultinalossof

controloveryourproductand/orprice

65 selecting the rightintermediArY

Youcanobtaininformationaboutpotentialintermediariesfrom

theCanadianTradeCommissionerServiceinCanadaandabroad

andfromtradeassociationsbusinesscouncilsand banks

tak va m a h ca c mak ca h a m. y ca a c a m m a am.



t vala a scv ma al, s h chckls lw.

sz a c

Howmanyfieldsalespersonneldoestheagentor

distributor have?Whatareitsshort-andlong-rangeexpansionplansifany?

Willithavetoexpandtoaccommodateyourneedsproperly?

Ifyeswoulditdoso?

sa c

Hasitssalesgrowthbeenconsistentoverthepastfiveyears?

Ifnotwhynot?

Whatareitssalesobjectivesforthenextyear?Howwere

they determined?

ta aa

Whatterritorydoesitnowcover?Isitconsistentwiththe

coverageyourelookingfor?Isitwillingandabletoexpand?

Doesithaveanybranchofficesintheterritoryyouwish

to cover?

Areitsbranchofficeslocatedwhereyoursalesprospects

are greatest?

Arethereplanstoopenadditionaloffices?

pc vc m

Howmanyproductorservicelinesdoesitrepresent?

Aretheycompatiblewithyours?

DoesitrepresentanyotherCanadianfirms?

Wouldtherebeanyconflictofinterest?

Woulditbewillingtoalteritspresentproductorservicemix

toaccommodateyoursifnecessary?

Whatwouldbetheminimumsalesvolumeneededtojustify

handlingyourlines?

Doitssalesprojectionsreflectthisminimumfigure?

Fromwhatyouknowoftheterritoryandtheprospectiveagent

ordistributorisitsprojectionrealistic?

Fac a qm

Doesithaveadequatewarehousefacilities?

Whatisitsmethodofstockcontrol?

Aretheircomputerscompatiblewithyours?

Whatcommunicationsfacilitiesdoesithave?

Ifservicingisrequiredisitequippedandqualifiedtodoso?

Ifnewequipmentandtrainingisrequiredtowhatextentwill

youhavetosharetheseadditionalcosts?

Ifnecessarywoulditbewillingtoinventoryrepairpartsand

replacementitems?

Mak cHowisitssalesstaffcompensated?

Doesithavespecialincentiveormotivationprograms?

Doesituseproductmanagerstocoordinatesaleseffortsfor

specificlines?

Howdoesitmonitorsalesperformance?

Howdoesittrainitssalesstaff?

Woulditbewillingtoshareexpensesforsalespersonnel

toattendseminars?

Cm

Whattypesofcustomersisitcurrentlyincontactwith?

Areitsinterestscompatiblewithyourlines?

Whoareitskeyaccounts?

Whatpercentageoftotalgrossreceiptsdotheseaccounts

represent?

pca

Howmanyprincipalsdoesitcurrentlyrepresent?

Wouldyoubeitsprimarysupplier?

Ifnotwhatpercentageofitstotalbusinesswouldyou

represent?Howdoesthispercentagecomparewithother

suppliers?

pma h

Canithelpyouresearchmarketinformation?

Whattypesofmediadoesituseifanytopromotesales?

Howmuchofitsbudgetisallocatedtoadvertising?

Howisitdistributed?

Wouldyoubeexpectedtosharepromotionalcosts?

Ifsohowwillthisamountbedetermined?

Ifitusesdirectmailhowmanyprospectsareonitsmailinglist

Whatprintedmaterialsareusedtodescribeitscompanyand

thelinesitrepresents?

Ifnecessarycanittranslateyouradvertisingcopy?

Doesithaveitsownwebsite?

SourceAdaptedwithpermissionfromWesternEconomicDiversificationCanada

READY FOR EXPORT: Building a Foundation for a Successful Export Program



71 internAtionAl trAderegulAtions

Youllhavetofamiliarizeyourselfwithyourtargetmarkets

importregulationsproductstandardsandlicensing

requirementsIfyoureaserviceexporteryoumayhaveto

acquireprofessionalorotheraccreditationfromthecountrywhereyoullbeoperating

72 eXPort declArAtions

UnlessyoureexportingtotheUnitedStatesreportingyour

exportsismandatoryunderCanadianregulationsFordetails

onhowtodothisgototheCanadaBorderServices(CBSA)

website(www.csa-asc.gc.ca/lcas//s-g.

hml)anddownloadorreadGuideBSF5081Exporting

Goods from Canada A Handy Guide for Exporters

TheB13AExportDeclarationalongwiththeappropriate

permitsandlicencesmustalsobepreparedbyexporters

priortoexportingtoallnon-USdestinationsItsavailable

atwww.csa-asc.gc.ca/e/g/c/13a/reAdMe.hml

trAdeAndinternAtionAlsecuritY

thWlCsmsogaza(WCo)has

vlaavhlchaal

slchaagasslaCallhSAFeFamwkamssalshaga

saasslchascamaagm

sghcaamgcsmsamsas

amhsamlssmvmgshgh

wllscaalslchas

tip

y ca als sm h b13A e dclaa

lccall sg h Caaa Ama edclaa CAed swa. Vs h Sascs Caaa

ws a www.aca.c.ca//vvw-ac-

.hm hw.

Choosingtherightshippingmethodisvitaltoyourexportsuccess.Exporter

C H A p t e r

shiPPersAndshiPPing

dvhg
http://www.cbsa-asfc.gc.ca/publications/pub/pubs-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/pub/pubs-eng.htmlhttp://www.cbsa-asfc.gc.ca/E/pbg/cf/b13a/README.htmlhttp://www.statcan.gc.ca/exp/overview-apercu-eng.htmhttp://www.statcan.gc.ca/exp/overview-apercu-eng.htmhttp://www.statcan.gc.ca/exp/overview-apercu-eng.htmhttp://www.statcan.gc.ca/exp/overview-apercu-eng.htmhttp://www.cbsa-asfc.gc.ca/E/pbg/cf/b13a/README.htmlhttp://www.cbsa-asfc.gc.ca/publications/pub/pubs-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/pub/pubs-eng.html



73 eXPort Permits

y a m :

ThedestinationcountryisontheArea Control List (whereany

exportexcepthumanitarianitemsrequireanexportpermit)

laws.jsc.gc.ca//Shwtm/c/Sor-1-53///

ThegoodsareontheExport Control List (goodsand

technologiesthatrequireexportpermitspursuanttothe

Export and Import Permits Act)laws.jsc.gc.ca//

Shwtm/c/Sor--202///

Fordetailedinformationaboutexportandimportcontrolsand

permitsrefertotheTradeControls&TechnicalBarriersBureau

(TCTBB)websiteatwww.a-mac.gc.ca/cls-cls/

.as

APDFpublicationcalledA Guide to Canadas Export Controls

isavailableatwwwinternationalgc.ca/cls-cls/a-a_s//g.as

Companiesintheagrifoodsectorcanlearnaboutexport

regulationsandcertificationsforfoodproductsbyvisiting

theCanadianFoodInspectionAgencywebsiteat

www.sc.gc.ca

tip

Av sag sl h g ma

maks qckl.

74 delivering Products

Therearefourwaysofgettingyourproducttoyourcustomers

doorstepChoosingtherightshippingmethodorcombination

ofmethodsisvitaltoexportsuccessyouwanttheproductto

getthereontimeandatthelowestcost

tip

Agcl a Ag- Caaas Ag-

ta Svc ws has a sl ls shg

scs ha a alcal ms scs. r

www.a-a.a.c.ca/acc/h-.hm.

ttruckingispopularforshipmentswithinNorth

Americabutservicedeclinesonceyougobeyondthemajor

industrializedcountries

rarailiswidelyusedwhenshippingtotheUnitedStates

ortoandfromseaports

Ashippingbyairismoreexpensivethansurfaceorseatransportbutthehighercostsmaybeoffsetbyfasterdelivery

lowerinsurancecheaperwarehousingexoticmarketsand

betterinventorycontrol

oashippinglargeitemsbulkcommoditiesandgoods

tooffshoremarketsthatdonotrequirefastdeliveryismore

economicalbysea

usingincoterms

tvacmmmlgaalshgammzmssagsh

iaalChamCmmc(iCC)has

vlasmskwasicms

MmasavalalahiCCwsa

wwwccw/cm

75 Freight ForwArders

And brokersyll al wh a l cms wh lvg cs g cs.

Howeveryoudontnormallydoitallyourselfyouusefreight

forwardersandcustomsbrokers

F faafreightforwarderwillhelpyouimprove

yourdeliverytimesandcustomerserviceTheseagencieswill

negotiateratesforyouwithshippinglinesairlinestrucking

companiescustomsbrokersandinsurancefirmsTheycan

handleallyourlogisticalrequirementsorjustnegotiateyour

shippingrate;itsuptoyou

c brokerscleargoodsthroughcustoms

preparecustomsdocumentationandremitdutiesowingon

exportedgoodsTheyarealsogoodsourcesofinformationon

recenttariffchangesandothercustomsrelateddevelopments
http://laws.justice.gc.ca/en/ShowTdm/cr/SOR-81-543///enhttp://laws.justice.gc.ca/en/ShowTdm/cr/SOR-89-202///enhttp://laws.justice.gc.ca/en/ShowTdm/cr/SOR-89-202///enhttp://www.dfait-maeci.gc.ca/controls-controles/index.aspxhttp://www.dfait-maeci.gc.ca/controls-controles/index.aspxhttp://www.international.gc.ca/controls-controles/about-a_propos/expor/guide.aspxhttp://www.international.gc.ca/controls-controles/about-a_propos/expor/guide.aspxhttp://www.international.gc.ca/controls-controles/about-a_propos/expor/guide.aspxhttp://www.inspection.gc.ca./http://www.inspection.gc.ca./http://www.ats-sea.agr.gc.ca/access/shipping-e.htmhttp://www.iccwbo.org/incoterms.http://www.iccwbo.org/incoterms.http://www.iccwbo.org/incoterms.http://www.ats-sea.agr.gc.ca/access/shipping-e.htmhttp://www.inspection.gc.ca./http://www.international.gc.ca/controls-controles/about-a_propos/expor/guide.aspxhttp://www.international.gc.ca/controls-controles/about-a_propos/expor/guide.aspxhttp://www.dfait-maeci.gc.ca/controls-controles/index.aspxhttp://www.dfait-maeci.gc.ca/controls-controles/index.aspxhttp://laws.justice.gc.ca/en/ShowTdm/cr/SOR-89-202///enhttp://laws.justice.gc.ca/en/ShowTdm/cr/SOR-89-202///enhttp://laws.justice.gc.ca/en/ShowTdm/cr/SOR-81-543///en



76 PAcking Your goods

Am c w hav a m ,aca h va.

Packthemtosurviverough-and-readycargohandlersand

poor roads

Duringtransithandlingandstorageyourgoodsmayhaveto

endurebadweatherandextremetemperaturesIftheyneed

specialtemperaturecontrolsorotherprotectivemeasures

besuretheygetthem

Thetypeofshippingmaydeterminethekindofpackingyou

shoulduseForexampleifthegoodsarecarriedbyshipyou

needtoknowwhethertheywillbeplacedaboveorbelowdeck

tip

p ackg ca c h sk h g as.

77 lAbels And mArks

Lallg glas va wl ma a, s v h qlals sh.

Yourproductmaynotclearcustomsiflabelsdontconform

tolocalrequirementssuchasproductweightorelectrical

standards

Markingdistinguishesyourgoodsfromthoseofothershippers

Marksshownontheshippingcontainermustagreewiththose

onthebillofladingorothershippingdocumentsandmay

includesomeorallofthefollowing

Buyersnameorsomeotherformofagreedidentification

Point/portofentryintotheimportingcountry

Grossandnetweightoftheproductinkilogramsandpounds

IdentificationofthecountryoforiginegMadeinCanada

Numberofpackages

Appropriatewarningsorcautionarymarkings

Provideapackinglistidentifyinganditemizingthecontentsof

eachcontainerEachcontainermustalsocontainapackinglist

itemizingitscontents

78 trAnsPortAtion insurAnce

Internationalcarriersassumeonlylimitedliabilityandmakethe

sellerresponsibleforthegoodsuptothepointofdeliveryto

theforeignbuyerForthisreasonyouabsolutelymusthave

internationaltransportationinsurance

Marinetransportationinsuranceprotectsbothoceanand

air-boundcargoItalsocoversconnectinglandtransportation

Therearethreemaintypesofmarinetransportationinsurance

F f Paa Aa(FPA)isthenarrowesttypeof

coverageTotallossesarecoveredaswellaspartiallosses

atseaifthevesselsinksburnsorisstranded

w Aa(WA)offersgreaterprotectionfrompartial

lossesatsea

A r isthemostcomprehensiveprotectingagainstall

physicallossordamagefromexternalcausesOncethe

documentstransferringtitlearedeliveredtotheforeign

buyeryouarenolongerliableforthegoods

79 eXPort documentAtion

Exportdocumentationidentifiesthegoodsandthetermsof

saleItalsoprovidestitletothegoodsevidenceofinsurance

coverageandcertifiesacertainqualityorstandardSeveral

documentsarerequiredforoverseasshippingandfallinto

two categories

7.9.1 sh cm

Shippingdocumentsarepreparedbyyouoryourfreight

forwarderTheyallowtheshipmenttopassthroughcustoms

tobeloadedontoacarrierandtransportedtothedestination

Keyshippingdocumentsinclude

Acommercialinvoice

Aspecialpackingormarkinglist

Acertificateoforigin

Acertificateofinsurance

Abilloflading

Abill of lading isusedforlandandoceanfreightandanair

waybill isusedforairfreightNotethattheoceanbilloflading

canbeanegotiableinstrumentthatpassestitletothegoods

Othertypesofbillspasstitletotheconsigneeassoonasthe

goodsaredelivered



tip

Gs sh sa a call s 110%

h val, cmsa h a css vlv

lacg ls gs.

7.9.2 Cc cm

Themostimportantcollectiondocumentisprobablythe

commercial invoicewhichdescribesthegoodsindetailandlists

theamountowingbytheforeignbuyerThisformisalsoused

forcustomsrecordsandmustinclude

thedateofissue

thenamesandaddressesofthebuyerandseller

thecontractorinvoicenumber

adescriptionofthegoodsandtheunitpricethetotalweight

andnumberofpackages

shippingmarksandnumbers

thetermsofdeliveryandpayment

oh cc cm c:

certificatesoforigin

certificatesofinspectionusedtoensurethatgoodsarefree

fromdefect

importandexportlicencesasrequired(forexampleaNAFTA

certificateoforigin)

710 dutY deFerrAl AnddutY relieF

Ifyoureimportinggoodsinordertore-exportthemyoumight

beabletousetheDutyDeferralProgramadministeredbythe

CanadaBorderServicesAgency(CBSA)Theprogramrelieves

ordeferspaymentdutiesifthegoodsareintransitthroughCanadaandwillnotbesoldhere

th a h cm h dda pam:

dy rf PaEnableseligiblecompaniestoimport

goodswithouthavingtopaycustomsdutiesaslongasthey

exportthegoodsafterimportingthem

FormoreinformationrefertoMemorandumD--1Duty

DeferralProgramatwww.csa-asc.gc.ca/lcas/

m-m/7/7--1-g.hml

Forfurtherinformationontheprogramreferto

www.csa-asc.gc.ca/m/-/m-g.hml .

daa PaWiththeDrawbackProgramdutyis

refundedonpreviouslyimportedgoodswhenthesegoods

havebeenexported

FormoreinformationrefertoMemorandumD--2Duty

DrawbackProgramatwww.csa-asc.gc.ca/lcas/

m-m/7/7--2-g.hml


www.csa-asc.gc.ca/m/-/a2-g.hml

b wa PaAbondedwarehouseisa

facilityoperatedbytheprivatesectorandregulatedbythe

CBSAinwhichyoumaystoregoodswithouthavingtopay

dutiesandtaxesThiscouldbebeneficialifyoureplanning

onimportinggoodsforthepurposeofexportingthem

FormoreinformationrefertoMemorandumD--Customs

BondedWarehousesat www.csa-asc.gc.ca/lcas/

m-m/7/7---g.hml


www.csa-asc.gc.ca/m/-/a-g.hml
http://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-1-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-1-eng.htmlhttp://www.cbsa-asfc.gc.ca/import/ddr-red/menu-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-2-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-2-eng.htmlhttp://www.cbsa-asfc.gc.ca/import/ddr-red/tab2-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-4-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-4-eng.htmlhttp://www.cbsa-asfc.gc.ca/import/ddr-red/tab8-eng.htmlhttp://www.cbsa-asfc.gc.ca/import/ddr-red/tab8-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-4-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-4-eng.htmlhttp://www.cbsa-asfc.gc.ca/import/ddr-red/tab2-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-2-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-2-eng.htmlhttp://www.cbsa-asfc.gc.ca/import/ddr-red/menu-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-1-eng.htmlhttp://www.cbsa-asfc.gc.ca/publications/dm-md/d7/d7-4-1-eng.html



y m k v vc , a cma , h w mh:

P thisisthemostcommonexportactivity

meetingtheclientrepeatedlyoftenatthesite

c pinindustriessuchastourism

thousandsofCanadiansearnincomebymeetingtheneedsofforeign visitors

ea alargelegalandaccounting

firmsaswellasmajorbanksaremostlikelytousethismethod

toestablishtheirpresenceabroad

e ye-businessisincreasinglymoreimportan

forconductingglobalbusiness

711 delivering services

Hw s

Thechallengesofdeliveringservicestoaforeignmarketarejust

ascomplexasthoseofdeliveringproductsThechallengesare

differenthoweverandoftendependonfactorsinyourtarget

marketsuchas

Extentandreliabilityoftelecommunications/Internetlinks

ExistenceofareliableITinfrastructure

FrequencyandconvenienceofairlinksbetweenCanada

andthemarket

Technologicalsophisticationreceptivityandflexibility

of customers

Potentialsupportthroughofficialchannelsgovernment

departmentsandinternationaldevelopmentagencies

Abilitytosatisfylegalregulationsgoverningworkpermitsorprofessionalcertification

Potentialtoenterintoalocalpartnership



81 understAnding the risks oF eXPort FinAncing

Ifbychanceyourfirstinternationalorderisfarlargerthanyou

expectedhowareyougoingtofinancetheexpansionyou need?

Paymentscantakemonthsandbuyersmaydefaultorgoout

of business

Self-financingagrowingexportbusinesscanbeveryrisky

especiallyforneworsmallerexportersFortunatelyhowever

thereareoptionsthatcanminimizeyourrisksandevengive

youacompetitiveedge

tipb a m cas ma m a

sccssl g sal.

exportMytH

i ca a

ys, ca! eag caac ll g

s w cssal ma lag caal las

a a l w sa. Scs sch as h Caaa ta

Cmmss Svc www.acmm.c.ca,

e dvlm Caaa www.c.ca, a h

bsss dvlm bak Caaa www.c.ca

hl agg m mak s

h vs wkg caal. th svcs a

sv, a .

Informationtohelpyoulearnaboutexportfinancingis

availableatwww.caaasss.ca/g/105/15/23/

ExportDevelopmentCanadawww.c.ca/glsh/lcas_.hmprovidesanextensivelistoftailored

resourcesincludingtheExportFinanceGuideonlinetoolto

helpyoudetermineyourfinancingneedshs://www.c.ca/

glsh/ls_1215.hm

82 leverAging cAPitAl

ev hgh Caaa s h lassv cs h wl whch

sss, h css g ca a .

Becauseofthisyourexportdrivewillneedareliablecashflow

Youwillalsoneedacomprehensivefinancialplanfortheexport

ventureIfyoudonthaveoneitwillbeverydifficulttoarrange

thefinancingtheventuremayneed

Themostimportantobjectiveofyourplanhoweverisensuring

thatyourcompanyalwayshassufficientcashoroperatinglines

ofcreditTodothistheplanmustinclude

A a highlightsyourfinancingrequirementsover

thenexttwoorthreeyearssoyoucandeterminethetiming

andamountofyourcashexpenditures

A apa alonger-termoverviewofthefundsyoull

needtocompleteyourexportprojectitprovidesanoperating

planagainstwhichyoucanmeasureactualexpendituresand

revenuesandtellsyouwhentheprojectwillstartgenerating

positivecashflows

C H A p t e r 8

identiFYingYoureXPortFinAncingreQuirements

Itsimportanttobediplomatic,especiallywhensecuringpaymentoroverseassales.Demandingpaymentuprontcanbeaterrible

insultinsomecultures.

Exporter
http://www.tradecommissioner.gc.ca/http://www.edc.ca/http://www.bdc.ca/http://www.canadabusiness.ca/eng/105/165/923/http://www.edc.ca/english/publications_9688.htmhttp://www.edc.ca/english/publications_9688.htmhttps://www.edc.ca/english/tools_12185.htmhttps://www.edc.ca/english/tools_12185.htmhttps://www.edc.ca/english/tools_12185.htmhttps://www.edc.ca/english/tools_12185.htmhttp://www.edc.ca/english/publications_9688.htmhttp://www.edc.ca/english/publications_9688.htmhttp://www.canadabusiness.ca/eng/105/165/923/http://www.bdc.ca/http://www.edc.ca/http://www.tradecommissioner.gc.ca/



Youllneedtoknowthetimingofbothcashinflowsand

outflowsCashflowplanningcanhelpyoudefendagainst

suchproblemsas

Exchangeratefluctuations

Transmissiondelays

ExchangecontrolsPoliticalevents

Slowcollectionofaccountsreceivable

Accuratedetailsareimportanttotheoveralleffectiveness

ofyourexportplan

tip

iaal a ams sall ak lg

av ha msc s, s allw hs cash

w lag.

83 where to get FinAnciAl helP

Thereareseveralsourcesoffinancialaidforexporters;

threeoftheseareExportDevelopmentCanada(EDC)

theBusinessDevelopmentBankofCanada(BDC)andthe

AgriMarketing Program

8.3.1 edC wk caa

Withanewinternationalcontractcomesoneofthemost

difficultobstaclessmallerexportersfaceraisingworkingcapital

tofundpre-shipmentcostsEDCsExportGuaranteeProgram

encouragesCanadianfinancialinstitutionstoadvancepre-

shipmentloanstoCanadianexportersandthencoversupto

5%ofthevalueoftheloan

TofindoutmoreaboutEDCsExportGuaranteeProgramand

otherEDCproductsandservicesrefertowww.c.caorcall

1-866-283-295

8.3.2 b dvm bak Caaa

BDCcanhelpyoumeetyourworkingcapitalneedsthrough

long-termfinancingandflexiblerepaymentoptionsCalla

representativeat1-8-232-2269orvisitwww.c.ca

8.3.3 AMak pam

TheAgriMarketingProgramaimstoenhancemarketing

capacityandcompetitivenessoftheCanadianagriculture

agri-foodfishandseafoodsectorsTheProgramassistsindustry

associationstoidentifymarketprioritiesandequipthemselves

forsuccessinglobalmarketsTheProgramprovidesfunding

forindustrytodevelopandimplementLongTermInternational

Strategies(LTIS)

AgriMarketingisthesuccessortotheCanadianAgricultureand

FoodInternational(CAFI)programItintroducesnewelements

includingsupporttoSMEsandaccesstofundingtosupport

marketingofinnovativeproductsTheProgramwillleveragethe

CanadaBrandandstartingin20102011associationswillbe

requiredtohaveamulti-yearLTISinplace

Formoreinformationrefertowww.ag.gc.ca/AAFC-AAC/

sla-ach.?=123050113&lag=g

tip

caaa.ca has lks aal, al

a vcal s ha acal ma a

asssac h w a c s.

84 methods oF collectingPAYment

Thereareseveralwaysforcustomerstopayaninvoice

ininternationaltradecashinadvancelettersofcredit

documentarycreditdocumentarycollectionandopen

accountWellexaminetheminorderofincreasingrisk

toyourcompany

8.4.1 Cah avac

Cashinadvanceisyourmostsecureoptionbecauseit

eliminatesallriskofnon-paymentandaddstoworkingcapitalUnfortunatelyfewforeignbuyersarewillingtopay

cashinadvancealthoughsomewillpayaportionwhen

goodsorservicesarespeciallyorderedForservicesa

retainermightbepaiduponsigningacontractafterwhich

progresspaymentsarematchedtodeliverables
http://www.edc.ca/http://www.bdc.ca/http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1239048540113&lang=enghttp://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1239048540113&lang=enghttp://www.canadabusiness.ca/http://www.canadabusiness.ca/http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1239048540113&lang=enghttp://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1239048540113&lang=enghttp://www.bdc.ca/http://www.edc.ca/



8.4.2 l c

Lettersofcredit(L/Cs)relyonbankstoreceiveandcheck

shippingdocumentsandtoguaranteepaymentAnL/Ccan

allowthecostsoffinancingatransactiontobebornebyeither

theexporterorimporter

Bothsightandtermpaymentprovisionscanbearranged

Lettersofcreditcanbeconfirmed orunconfirmedForexample

aCanadianbankcanconfirm anL/Cissuedbyaforeignbank

thusguaranteeingthattheCanadianbankwillpaytheexporter

eveniftheforeignbankdoesntThiskindofL/Cismuchbetter

foryouthantheunconfirmedone

L/CscanalsobeirrevocableThismeanstheycantbecancelled

oramendedwithoutyourapprovalThemostsecureL/Cisone

thatisbothconfirmedandirrevocable

i acc, a l/C wk k h:

Thecustomerarrangesaletterofcreditwithhisorherbank

ThecustomersbankpreparesanirrevocableL/CThis

includesspecificationsastohowyoulldeliverthegoods

ThecustomersbanksendstheL/CtoyourCanadianbank

for confirmation

Yourbankissuesaletterofconfirmationandsendstheletter

andtheL/Ctoyou

YouchecktheL/Cvery carefullyInparticularyouensurethat

itagreesinallrespectswiththetermsofyourcontractwith

thecustomerIftheL/Cstermsandthoseofthecontractare

differentandifyoudontmeettheL/Cstermsbecauseyou

overlookedthediscrepancytheL/Cmaybedeemedinvalidandyoumightnotgetpaid

Youarrangeshippinganddeliverywithyourfreightforwarder

Oncethegoodsareloadedyougettheappropriateshipping

documentsfromtheforwarder;youusethesetoprovethat

youhavefullycompliedwiththetermsofthecontract

Youtakethesedocumentstoyourbankwhichsendsthem

tothecustomersbankforreviewThecustomersbank

sendsthemtothecustomerandthecustomerobtainsthe

documentsthatwillallowthegoodstobeclaimed

Thecustomersbankpaysyourbankwhichthenpaysyou

tip

Gv g maks aqa a, v

msc cm ms.



8.4.3 dcma c

Exporterscanalsousesight andterm documentarycredits

as follows

Adocumentarycreditcallingforasight draft meansthatthe

exporterisentitledtoreceivepaymentonsightieupon

presentationofthedrafttothebankAterm documentarycreditincontrastmayallowfor

paymentstobemadeovertermsof3060or90days

oratsomespecifiedfuturedate

8.4.4 dcma cc

Inacollectionyoushipgoodstoanimporter(yourcustomer)

andforwardtheshippingdocumentstoacollectingbankNext

thecustomerpaysthecollectingbankinexchangeforthe

documentsYouthenobtainthemoneyfromthebank

Withacollectionnobankhasguaranteedthatyoullgetpaidandyourerequiredtofinancetheshipmentuntilyourcustomer

receivesthegoodsandpaysthroughasightortermdraft

8.4.5 o acc

Openaccountsrequireyoutoshipgoodsandpasstitletothe

customerbeforepaymentismadeInthesecasesyourefully

exposedtoanycreditriskassociatedwiththecustomeruntil

paymentisreceivedInadditionbecauseopenaccountterms

usuallyallow306090days(orevenlonger)beforepayment

isdueyouareinfactfinancingthetransactionforyourbuyer

85 insuring AgAinstnon-PAYment

th macs ag ca sv a lasg.

YoucanprotectyourcompanythroughExportDevelopmentCanadasAccountsReceivableInsurance(ARI)ARIprotects

youagainstnon-paymentbycoveringupto90%oflosses

resultingfromawidevarietyofcommercialandpoliticalrisks

Betterstillyoullbeabletofreeupyourcapitalandpossibly

extendmoreattractivepaymenttermsandcreditoptionsto

new customers

Fordetailsvisitwww.c.ca/glsh/sac_accs_

cval.hm
http://www.edc.ca/english/insurance_accounts_receivable.htmhttp://www.edc.ca/english/insurance_accounts_receivable.htmhttp://www.edc.ca/english/insurance_accounts_receivable.htmhttp://www.edc.ca/english/insurance_accounts_receivable.htm



91 understAnding internAtionAl contrActs

Ininternationaltradecontractualarrangementscanbe

muchmorepronetocomplicationsthandomesticones

LanguagebarriersmaycausemisunderstandingsCultural

andgeographicalimpedimentsmaycropupWordsmayhavedifferentmeaningsindifferentplaces

Internationalbusinesscontractsmustthereforebespecific

andall-encompassingThiswillgoalongwaytowardreducing

misunderstandingsmisconceptionsanddisputes

Findingalegalprofessionalwhospecializesininternational

tradewillhelpyousidesteppitfallsofregulationandlawand

ifnecessaryresolvedisputesYoushouldalsoacquiresome

knowledgeofinternationalconventionsthebusinesslaws

governingyourtargetmarketandexistingtradeagreements

betweenthatmarketandCanada

92 understAnding the ProPer lAw

Problemsininternationalbusinesscontractscanoccur

becauseofdifferencesinthelawsofthecountriesinvolved

Whendifferentlawsareappliedresultsmaybeinconsistent

andsubstantiverightsmaydependonwhoselawapplies

Forexampleonelawmayrequirethatacontractbewritten

whereasanothermaynotOrunderonelawpersonswhoarenotapartytothecontractmayhavecertainrightswhereas

underanotherlawtheymayhavenorights

y a m, h, ah m h whch aw h aw.

93 contrActs For the sAleoF goods

A cac cvg h sal gsvlvs asg, agg

as, gs a a sm m.

Theactualtransferofthepropertydistinguishesthesaleof

goodsfromothertransactionssuchasleasesorpropertyloans

Thetermgoodsincludesallmovablethingsexcludingreal

estateandsuchintangiblesasdebtssharespatentsand

servicesFurthermorethefactthatmoneychangeshands

distinguishesasaleofgoodsfromothertransactionssuch

asbarterorcounter-trade

9.3.1 ta a h c a

Severalfactorshingeontheexactlegalmomentwhenthebuyer

takesownershipofthegoods(informaltermswhentitlepasses

oristransferredfromyoutothebuyer)

rthetransferoftitleaffectsthepartiesrightsincaseof

totalorpartiallossdamageordestructionofthegoods

rjonceithasoccurredtransferoftitlemaypreclude

yourbuyerfromrejectingthegoodsdespitevalidcomplaints

regardingqualityquantityordescription

Ponceyourbuyertakestitleyoucansuehimorherfor

thefullunpaidpriceratherthanmerelyforthelostprofit

r f Aaftertakingtitlethebuyercanenforcehis

orherpropertyrightsthroughcourtactionorothermethods

C H A p t e r 9

theFinePrint

uahlasiaata

Ittakesyearstobuildamarket,butonlydaystoloseit.CanadaExportAwardWinner



9.3.2 dv h

Youmustdeliverthegoodstoyourbuyerinoneoftwoways

Physicallybydeliveringalegaldocumentoftitlesuchas

abilloflading;or

Symbolicallybydeliveringforexamplethekeytowhere

thegoodsarestored

Yourcontractshouldspecifywherethedeliverywilltakeplace

Ininternationalmattersthisisusuallydefinedbyusingsuch

InternationalCommerce(INCO)termsasCostInsuranceand

Freight(CIF)orFreeonBoard(FOB)

tip

ulss hws sc, h lac lv s

s lac sss.

9.3.3 Accac a

Ifyoumeetalltheconditionsofthecontractyourbuyermust

acceptthegoodsRefusaltoacceptthemwithoutjustification

giv

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