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Korean: 한국 고객을 위한
Staff Answer
Jan 30, 2020 - 12:03 AM
Hi,
Thanks for your question. I hope my answer will be beneficial for everyone reading this.
Following are the major pitfalls of an export business that you should evaluate before starting your business -
1. Insufficient knowledge of exchange rates: It is required to have knowledge of exchange rates when trading internationally, as you'll get exposed to potential currency fluctuations and are restricted when planning ahead or trying to get the best price. The solution can be to Consult with your banker on how best to lock in your profit on a transaction and protect yourself from exposure to risk. Selling in U.S. dollars brews less risk. That way you can hedge against the Sturm und Drang of currency fluctuations.
2. Lousy relationship with customs officials:
Don’t underestimate the importance of having a good relationship with customs officials, transportation folks and customs brokers. Always remember they know more than you. You are responsible for compliance with all import and export laws, so get along with everyone and listen to what they have to say. Even if you hire a firm to carry out import-export procedures on your behalf, the buck still stops with you.
3. Making a bribe:
If you are conducting business in a foreign market, you must be familiar with and comply with the Foreign Corrupt Practices Act (FCPA). You should learn about the Foreign Corrupt Practices Act and discover how to avoid or handle bribery disputes.
4. Being clueless about import restrictions or control on a product:
Import restrictions comprise of quotas, import licensing requirements and so forth. Importing goods that violate quota restrictions or are unsafe could end up costing you money in fines and penalties, and that will erode your profits. Are you complying with both state and federal government import regulations?
5. Failure to conform to packaging, marking, and language (localization) laws:
What are the laws of the country you are entering? Consult with your transportation specialist and your customer and then compare notes. For example, do labels on your product have to be in the local language? How sturdy must the carton be? What markings need to be on the outside of the cartons to comply with the law? Is there any taboo to the number of products packed in the box- eight chocolate bars versus 13, for instance? The point is to leave no stone unturned when it comes to honing in on the details of your product movement.
6. The unfamiliarity of incoterms and how they affect a sale:
Incoterms are considered essential to use in contracts for the sale of goods internationally. For example, preparing a proforma invoice using one of the common terms, CNF, which means cost and freight—you are responsible for paying the freight costs and collecting from your customer later. You must understand the costs and responsibilities that come with using a specific Incoterm. If you don’t, it can lead to underpayment to you, for instance, on an export sale or overpayment to your supplier on an import. It can also lead to customs problems, including documentation that might be prepared incorrectly. You can reduce the risk of the sale of goods internationally by negotiating effective trade terms.
7. Bad record-keeping:
On all your international transactions, keep good records for as long as you keep IRS records- from how you declare a good (Harmonized code, for instance) to termination of a transaction whether by email or some other means, to the financing of a deal.
8. Never verify the reputation and legitimacy of a supplier or customer:
On verifying customers, conduct an online search and see what bubbles up on search engines. Also, contact government officials to see what they know about the customer. If you are exporting from the XX country to a customer in YY country, contact one of the International Trade Specialists based on your sector of activity to find out more about the customer. You might also reach out to the Embassy in YY country to see what they know. Whether you are working with a supplier or customer, ask for references. Check them carefully. Ask the references for references on the supplier or customer you are about to do business with. You can learn more about, here.
Thanks and regards,
go4WorldBusiness.com Team
Thanks for your question. I hope my answer will be beneficial for everyone reading this.
Following are the major pitfalls of an export business that you should evaluate before starting your business -
1. Insufficient knowledge of exchange rates: It is required to have knowledge of exchange rates when trading internationally, as you'll get exposed to potential currency fluctuations and are restricted when planning ahead or trying to get the best price. The solution can be to Consult with your banker on how best to lock in your profit on a transaction and protect yourself from exposure to risk. Selling in U.S. dollars brews less risk. That way you can hedge against the Sturm und Drang of currency fluctuations.
2. Lousy relationship with customs officials:
Don’t underestimate the importance of having a good relationship with customs officials, transportation folks and customs brokers. Always remember they know more than you. You are responsible for compliance with all import and export laws, so get along with everyone and listen to what they have to say. Even if you hire a firm to carry out import-export procedures on your behalf, the buck still stops with you.
3. Making a bribe:
If you are conducting business in a foreign market, you must be familiar with and comply with the Foreign Corrupt Practices Act (FCPA). You should learn about the Foreign Corrupt Practices Act and discover how to avoid or handle bribery disputes.
4. Being clueless about import restrictions or control on a product:
Import restrictions comprise of quotas, import licensing requirements and so forth. Importing goods that violate quota restrictions or are unsafe could end up costing you money in fines and penalties, and that will erode your profits. Are you complying with both state and federal government import regulations?
5. Failure to conform to packaging, marking, and language (localization) laws:
What are the laws of the country you are entering? Consult with your transportation specialist and your customer and then compare notes. For example, do labels on your product have to be in the local language? How sturdy must the carton be? What markings need to be on the outside of the cartons to comply with the law? Is there any taboo to the number of products packed in the box- eight chocolate bars versus 13, for instance? The point is to leave no stone unturned when it comes to honing in on the details of your product movement.
6. The unfamiliarity of incoterms and how they affect a sale:
Incoterms are considered essential to use in contracts for the sale of goods internationally. For example, preparing a proforma invoice using one of the common terms, CNF, which means cost and freight—you are responsible for paying the freight costs and collecting from your customer later. You must understand the costs and responsibilities that come with using a specific Incoterm. If you don’t, it can lead to underpayment to you, for instance, on an export sale or overpayment to your supplier on an import. It can also lead to customs problems, including documentation that might be prepared incorrectly. You can reduce the risk of the sale of goods internationally by negotiating effective trade terms.
7. Bad record-keeping:
On all your international transactions, keep good records for as long as you keep IRS records- from how you declare a good (Harmonized code, for instance) to termination of a transaction whether by email or some other means, to the financing of a deal.
8. Never verify the reputation and legitimacy of a supplier or customer:
On verifying customers, conduct an online search and see what bubbles up on search engines. Also, contact government officials to see what they know about the customer. If you are exporting from the XX country to a customer in YY country, contact one of the International Trade Specialists based on your sector of activity to find out more about the customer. You might also reach out to the Embassy in YY country to see what they know. Whether you are working with a supplier or customer, ask for references. Check them carefully. Ask the references for references on the supplier or customer you are about to do business with. You can learn more about, here.
Thanks and regards,
go4WorldBusiness.com Team
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