"EXPORTING AN ALTERNATIVE FOR SMALL BUSINESS GROWTH TARGET COUNTRY: MEXICO"

 By: DELIA SIGUENZA-ROJAS

As the world economy becomes, interdependent, selling abroad becomes a genuine opportunity for small business owners; they are beginning to realize the significance of selling to the world market. The size of the business does not have to be an impediment for selling in the global marketplace; experience shows that small business owners who have been able to find a niche can export successfully. An entrepreneur may consider the next advantages of exporting: Opportunity of growth, Increased number of customers, increased profits, Tax advantages, Favorable publicity and recognition, Additional markets, Added product/service lines and Improved competitiveness. However, it also demands hard work, perseverance, and a commitment of resources. It requires planning, market research, attention to detail and compliance with foreign country’s' regulations. To export an entrepreneur should be able to accomplish the following tasks:

 

  1. Evaluate his/her export readiness (Analyze the capabilities of the small business)
  2. Know the export potential of the business's product and/or service
  3. Identify foreign markets that suit the product/service
  4. Study market entry strategies and export procedures
  5. Learn how to process exports Price and methods of payment for the products
  6. Consider the aspects of the export agency and distribution agreements
  7. Consider the methods of payment for the products.

 

A. Indirect Exporting

The simplest way to manage the firm’s export business is to employ outside specialists. The firm may hire a trading company. In the U.S an Export Management Company (EMC) performs all the transactions relating to foreign trade for the firm. The advantage is that the firm avoids the overhead costs and administrative burden involved in managing exports affairs. The disadvantage is that the skills and know-how are accumulated outside the firm, not in it.

 

B. Direct Exporting

The Advantage over the indirect exporting is in the control of operations. With direct exporting, the firm is able to more directly influence the marketing effort in the foreign market. The firm also learns how to operate abroad. The firm should decide between establishing a sales subsidiary or employing independent middlemen. The later option means and agent to mange sales and administration paid through fees and commissions. There are many separate functions to be taken into account in direct exporting, the major tasks are:

 

Product Shipment

Local Distribution

Getting Paid

Legal Issues

After-sales support

Transportation to the border

Finding a distributor

Checking creditworthiness

Export license

Service

Clearing through customs

Screening distributors

Getting paid in local currency

Hiring an agent

Parts and supplies

 

Personal visit

Hedging against currency losses

Transfer of tittle/ownership

Training of locals

 

Negotiating a contract

Converting funds to home currency

Insurance

Creating a sales subsidiary

 

Exploring New Markets: Mexico

According to the Office of International Trade, 97% of companies involved in direct merchandising exporting are small firms representing the largest pool for potential growth in export sales. When identifying foreign markets, an entrepreneur should consider Mexico as a target country; the following reasons support this advice.

 

 

 

 

 

Three steps are strongly recommended to be followed when selling in the Mexican market:

 

  1. Take advantage of the services through the U.S department of Commerce commercial service, which allows the small business firm and its owner (s) to benefit from the available resources. Its Web site is: www.doc.gov
  2. Consider whether appointing a Mexican agent or distributor, or opening direct sales offices and subsidiaries. However, this latter option can be a difficult task. If the decision is to rely on the services of an agent, it is important to develop a close working relationship with the agent or distributor, providing adequate training, and product support including a contract with specific cancellation clauses.
  3. The U.S exporter is encouraged to conduct a commercial background check on the Mexican market. Determine if the product is new on the market, or if the market is extremely competitive, advertising and other promotional support should be negotiated in detail with the representative.

 

TOP WEBSITES RELATED TO EXPORTS AND EXPORTING TO MEXICO

http://www.ita.doc.gov/uscs/mexico/mexico.html: A service dedicated to provide quality export assistance to U.S businesses. With information regarding: commercial services, export promotion services, trade statistics, trade events and calendars, country and industry research.

http://www.uscommerce.org.mx: site that provides a wealth of Mexico-specific commercial intelligence where information about market research and contact information can be found.

http://www.sbaonline.sba.gov/expanding/export.html: a useful site that helps small business with information about counseling in international trade, training sessions, and publications, business development information, etc.

http://www.toolkit.cch.com: a terrific web site that provides a total know-how for small business, with a wide range of subjects from getting start your business, to financing, advertising, managing, etc. It also offers connections to various other relevant sites.

http://www.exportinstitute.com: This site provides a comprehensive guide to answer the most common questions, as well as export links, and consulting on line.