THE RIDDLE OF THE EXPORTER™
8 STEP PROCESS TO CONQUER 
THE WORLD OF EXPORTING.
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Dear Betty Sue...help for Gastro Gal. Step #1 Getting Started

10/21/2015

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Dear Betty Sue,
​

After taking your class The Riddle of the Exporter™, we know there might be some benefits in exporting.  Our store, Geeky Gastro Gadgets in Frostproof, Florida, specializes in finding unique gastronomic gadgets from new inventors around Florida and the U.S.  We carry items that range from a crawfish cracker, to a jalapeño seed remover to a foolproof sushi rolling kit.  We are considering adding some Florida seafood spice concoctions to the mix. Right now, we have a steady flow of international orders and an increasing number of inquiries from clients overseas.  One inquiry is from a kitchen specialty store in London that caters to expats.
 
Can we export? How can we tell if exporting should be in our future?
 
Signed,
Gastro Gal
 
Dear Gastro Gal,
Congratulations for considering exporting as part of your business strategy. Every company should, even if they decide that it’s not in the stars. A decision to start exporting should take a little more consideration than looking into a crystal ball at the local fair.
 
A friend and colleague, Mr. Hal Jacobson who is an International Trade Specialist with SCORE and North Texas SBDC, is just than man that  can help you map out your next step... or not.  Mr. Jacobson is a wealth of information, having served as the VP of Quaker Oats International for 37 years with a slight break in the middle when he performed his service as WWII Air Force pilot .(He asked me not to mention that he was awarded the Purple Heart ...but how could I help myself?) He is semi-retired. In his spare time he works to help new exporters. So lets turn it over to the expert and let him guide us in determining our future.
 
Signed,
Betty Sue, preferring fact to fortune telling
 
*Disclaimer: The names of exporters and their stories have been changed to protect their identity.  The names and expertise of our advisors are very real and often understated.   The story is funny, the advice is authentic.
 
 
 
Dear Gastro Gal,
 
Exporting is exciting but glad you are taking a good look before you leap.  I receive export questions all the time from all over the country and listed below are five key considerations to help you determine if selling internationally is viable for your products and your company.
 
 #1 Key Consideration to Export
Can your product be adapted to foreign markets?
•  Can’t sell a can of peas in Russia without multi-lingual labels
•  If gadget involves electricity with 110/60V while the rest of the world is 220/50V, you’ve got a problem that a transformer can fix but do you expect your end user to buy a transformer in order to buy the item? I think not.
•  Metricize-while major industries are already using the metric system, not everyone is and the rest of the world does.
 
#2 Key Consideration to Export
You must know your international distribution channel
•  Understand the distribution channel overseas: retailer vs. wholesaler
•  Distribution channels are different for different global target markets
 
#3 Key Consideration to Export
One size does not fit all when it comes to international pricing
•  Many new exporters want to use their domestic U.S. price.  This doesn’t make sense because it has domestic costs built in such as selling, marketing, advertising and delivery, which are not part of the export costs.
•  Put into the price, only those costs involved in promoting and selling your product in the foreign market. 
•  Pricing for international markets has to be built separately.
 
#4 Key Consideration to Export
How are you going to collect the money?
•  It doesn’t do you much good to expand to global markets, if you don’t know how you are going to get paid.  Will it be by credit card or Paypal?   Paid in advance sounds good but usually that is a deal breaker. How does one protect himself? Letters of Credit or Documentary Draft terms through the banking system are some of the customary international payment methods. 
 
#5 Key Consideration to Export
Cultural considerations
Culture affects everything in international transactions from translations to meetings to negotiations.  Bad translations of brands and slogans are a deal breaker. Insensitive communications will derail the deal.  Put in the time and effort to learn about your new client.
In the worldwide trading community titles of the negotiating participants are important. Devise one that adds to your image.  “Order Clerk” is inappropriate; International Sales Specialist works much better.        
 
Good luck!
Hal


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Dear Betty Sue: Top 5 Scams in International Trade  

10/8/2015

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Dear Betty Sue,
We sell industrial sewing machines and replacement parts for older machines.  We recently received an inquiry from Lesotho (where the heck is Lesotho?). Almost immediately we received a very large order (for us).  Are we lucky or is this too good to be true?
Signed,
Eager but Skeptical
 
Dear Eager but Skeptical,
Congratulations on entering the exciting world of exporting, however you are wise to always check ‘em out first! Some people out there are as crooked as a barrel of fish hooks.  Look at The Riddle of the Exporter™ Step #1 for some  Dos and Don’ts to be aware of potential scams. See David Murray’s, list  below of current scams hoisted on folks by unscrupulous , international outlaws.
 
Lesotho is an iddy biddy country surrounded and locked in by South Africa.  Truth is, their major industry is textile manufacturing so the request for sewing machine parts could be legit.
 
Let’s do our due diligence and if they are legit, just maybe you will have an order worth actin’ on. If   The first thing you should do is call your local USEAC for a “check em out” report, an IPS (International Partner Search) or get a credit check from a trustworthy credit agency. Once you have completed the credit check, the next line of defense is to structure your payment process to reduce risk. David suggests cash in advance on this one.  Check out The Riddle of the Exporter™ Step #7-Payments & Finance.
 
Good luck and Happy Exporting
Betty Sue
 
*Disclaimer: The names of exporters and their stories have been changed to protect their identity.  The names and expertise of our advisors are very real and often understated.   The story is funny, the advice is authentic.
 

 Dear Betty Sue and Eager but Skeptical,
After many years in international trade, I have seen a lot  of success but also a lot of scams to derail success (and your pocketbook).  Here are my Top 5 International Trade Scams.
Best of luck,
David
 
#1 International Trade Scam
The fake freight forwarder company scam.
The fraudulent forwarders pose as legitimate companies with spare cargo capacity. Their truck arrives on-time to collect the freight and then disappears, never again to be seen.
The Scoop:
Here is how it works: Once a signed and sealed agency agreement is in place between both parties and business starts, all appears to be normal. This is until the cargo arrives at the port and no-one has received the original bill of lading from the forwarder in China. When contacted, the forwarder demands a large ransom for the release of the original bill of lading. Companies which refuse to pay find themselves on an expensive rollercoaster ride of meetings with customers, lawyers, insurers and shipping lines in order to obtain the original bill of lading so the cargo can be released. By spreading shipments around a number of shipping lines, fraudulent forwarders can make this recovery process even more onerous.
These forwarders may be real companies who are just out for the quick kill, or fraudulent companies that are not registered in China at all as a freight forwarder, making it more difficult to take any recourse.
 
#2 International Trade Scam
The “Close The Deal Meal” Scam
A big deal is closed and the middle man encourages you to come to China (usually meeting clients in person is good advice) but while there suggests a celebratory meal for you and gift for your new customer.
 
The Scoop:
There is no deal and, in fact, there is no Chinese company either. The big lure of this scam is that nobody wants to fly all the way to China, have a great meal at someone else’s expense, and then be too cheap to spend USD$3,000 to $8,000 more to seal the deal.
 
#3 . International Trade Scam
The new bank account to pay us scam.
This scam is usually employed against a foreign company that has been making purchases from a Chinese company for an extended period. The foreign company has been making its payments pursuant to purchase orders that specify the company bank account to which payment should be made. Suddenly, the “Chinese company” (note the quote marks here) sends an email to the foreign company requesting funds for outstanding POs be made to a new bank account. Often, the name on the bank account is not the same.
 
The Scoop:
What is the scheme here? It is always possible that the Chinese company has changed its bank account, but you had better be quite certain of this. In the old days, the scheme was either that the Chinese company had hit hard times or an employee at the Chinese company was seeking to get your payment instead of the company. The Chinese company would get the money in Hong Kong and then claim that you had never paid and still owed them money because it was your fault for having made the payment to someone other than to them.
 
Last year this scam became even more sophisticated when computer hackers started hacking into Chinese companies’ computers and sending out invoices that purported to be on behalf of the Chinese company. This means that you can NEVER trust an email communication from a Chinese company. Email is inherently insecure in China and you never know with whom you are really dealing when engaging in electronic communication.

Chinese companies tend to be very loyal to their banks and so you should view with extreme suspicion any request to make a change in the payment bank. You should not even consider following such a request unless the request is made in writing on a revised purchase order stamped with the company seal. Even in that case, it is important to contact someone you know in the company with supervisory authority to ensure that the request is valid.
 
#4 International Trade Scam
The IP registration scam
This is a tried and true favorite and it comes back in new forms every year. A favorite is the fake law firm or fake trademark/copyright/patent agent scam. Under that scam, a website proclaims really cheap trademark, copyright and patent registrations in China. The foreign company sends money and nothing ever gets filed.
 
The Scoop:
There are two variations on this one, one much more sophisticated and harmful than the other. The first and more simple version is for the fake China law firm or China IP agent to get a one-time payment and then do absolutely nothing further. Under this scenario, this foreign company quickly realizes it has been scammed and, more importantly knows it must still legitimately register its IP in China.
 
Under the more sophisticated version, however, the fake Chinese law firm or IP agent keeps updating the foreign company and keeps requesting more money along the way. Many (probably even most) legitimate law firms and IP agents charge for registrations in stages so even savvy foreign companies see nothing wrong in this. The smartest of these sophisticated scammers even eventually send the foreign company a fake trademark registration certificate or copyright registration certificate (I am personally not aware of this having gone so far with a patent registration, but I would not doubt that it has). The foreign company then thinks it is covered for its China IP registrations and does not learn for many years later that it is not.
 
#5 International Trade Scam
The fake company scam.  Even the Alibaba Gold Vendor ones!
This is why you use the U.S. Commercial Services IPS service (official name is International Partner Search, Betty Sue calls it the “International Check ‘Em Out Service”)
 
The Scoop:
The old familiar, just a plain old fake company or posing as part of a real company or the newer version where criminal organizations buy failing operators and continue to trade under their name in a state of virtual insolvency. They are able to identify and accept cargo which is subsequently stolen in transit.
 
Source David D. Murray, Attorney, VP & General Counsel, Ocean Global Shipping Line Ltd., www.cathayocean.com

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