Really?! As if for some reason the world’s largest economy and among the most open markets on Earth could be anything but competitive.

If this blog post does nothing more than dispel the untruth that we, as a nation, are noncompetitive or somehow not up to the challenges of global commerce, I’ll be a happy camper!

I invite my readers to consider:

Our GDP (our national paycheck) is approximately $15 Trillion, and our labor force contributing to our national salary is about 170 million.

No nation on Earth comes close to that level of worker output – no nation makes more goods and services with fewer units of cost than does this nation – not even close.  That’s one of the definitions of competition – per worker output.

Still not convinced?

The Geneva-based World Economic Forum meets annually to assess the world’s most competitive nations. In so doing, it uses a matrix of various economic benchmarks such as each country’s financial strength, banking sector stability and market access to capital, translucency in a nations’ political, judicial and legal systems, level and quality of education, quality of infrastructure, access and use of cutting edge technology, barriers to market entry for entrepreneurs, etc. It is a list in which the US regularly ranks among the top 3 (this year we fell to 5 largely due to the budget impasse in Congress). It should be of interest the nations that at times rank higher than the US include Singapore, Sweden, Switzerland – nations that are far smaller, less complex, homogeneous with far fewer global responsibilities and less international reach than does our country. It also should be of note that our chief economic competitors including Germany, China and Japan, are further down the list and haven’t ranked ahead of the US since the early 90’s, and then only Japan ranked higher.

Our competitiveness is better known and felt outside the US than within our own borders. We tend to associate competitiveness with wage rates only, and while that’s part of the equation, it’s not the entirety.

Referring back to the matrix used by the World Economic Forum to assess  competitiveness, the security of a nation’s financial system, the translucency of its judicial and legal systems, the soundness and dependability of its infrastructure and security, etc., all impact and can add significantly to the cost of a good produced and sold. For the US, these costs are among the lowest on Earth.

Over the past 10 years, our competitive edge has strengthened worldwide, especially when gauged against developing markets where growth has surged like Brazil and China. This partly is due to wage rates in those markets rising far faster than those here at home. Couple that with a rise in oil prices and, hence, transportation costs, and it has a combined effect of further eroding the cost benefit of cheap labor overseas.

There are a number of US manufacturers for whom these macro trends are beginning to impact where in the world they choose to manufacture products, and its having a welcoming effect on the US economy.

A full 60% of Caterpillar’s planned $4 billion in capital expenditures in 2012, will be in the US. Carlisle, an American tire manufacturer, is moving production back from China to Tennessee, and the Big Three US auto makers, fresh from trimming costs and becoming world-competitive again, are taking many of their US facilities out of mothballs. Ford’s van production facilities in the UK and Turkey are moving back to Kentucky, while some of its transmission and pump production in Japan and China respectively, is returning to the US.

I read a few months ago an article in the ‘Indianapolis Star’ which cited a report by Alix Partners comparing product price variation between the US and China. To paraphrase, ‘in 2005, Chinese produced parts arrived at US ports priced an average 22% lower than comparable US products. By the end of 2008, that gap had narrowed to 5.5%.’ I would bet that with the economic slowdown that began in late ’08, particularly in the developed world, which further depressed prices in the developed West, and with continued fast growth in the developing markets, that gap has continued to narrow markedly.

Lastly, I participated in an export seminar in Fort Wayne a few days ago and one of my talking points focused on this topic of American competitiveness. I sat down ready to listen to the next speaker when the gentleman to my left, a businessman from Nyloncraft, a sizeable Mishawaka-based, world-class injection molding firm, let me know he agreed with my comments, and why. His firm had sourced from China a unique, rather complex pipe that was used in one of their processes. In an effort to improve lead time, they found another supplier….in the US….better lead time AND less expensive…. in neighboring South Bend.

So don’t fret my fellow Hoosiers, this state and nation are most certainly competitive.

Andy Reinke is the President of Foreign Targets, Inc. (FTI)  an export management company creating and managing proactive export programs for small and medium sized manufacturing firms.  This is achieved by utilizing a proven methodology:  FTI’s Core-8 Steps to Export Management. Read more about export in the ISBDC’s Exporting Your Products and Services FAQ Page.

Andy Reinke - 

Dubai is a bit of a paradox. Among the richest lands on earth, Dubai has no centralized sanitation system, relying on constant collection by tankers of the city’s thousands of septic tanks. While traditional Arab wear and adherence to Muslim custom is common place, you’re likely to find women dressed both in burqas or abaya’s as well as jeans at the local Starbucks, or men dressed in Levis as well as thawbs or kanduras (long white or cream-colored gowns) topped with turbans, drinking Coca-Cola’s while behind brightly colored American-made cars (I saw several Dodge Chargers, Hum-V’s and Corvettes in particular). As an avid world traveler, even I was amazed at the region’s dichotomous mix between Arab and Western culture.  Somehow, the mix worked quite well from what I witnessed.

Now – back to doing business in the UAE.  You should know that US exports overall to the UAE have nearly doubled from $8.1 billion in 2005 to a record $15.9 billion in 2011 despite a rough economic patch for this Gulf Coast Country during the financial crises. Many of the products showing the strongest growth for US exports between ’05 and ’11 are those in which Indiana does especially well, including:

Source:  Foreign Trade Division – US Census Bureau

I was in Dubai for the Middle East Electricity 2012 Trade Show, which rivals the IEEE hosted in the US every other year, the industry’s largest. Although large with hundreds of firms exhibiting from over 50 countries, the US had only 14 firms participating. My client’s products were well-received, with our general impression that for the money and effort expended in cost and travel, the trade show was well worth the effort having met over 60 meaningful contacts from 22 countries spanning the Middle East, the Far East, north and central Africa and Europe.

The visitors to our booth could not have been happier to see us, commenting that it was good to see American companies of all sizes exhibiting at the show. We were told numerous times by the Middle Easterners present that they not only preferred but often only bought US or European-made equipment within our sector (power distribution equipment). We were given an RFQ at the show for equipment in Uganda, met with a customer to whom we’ve sold before and who’s currently considering a large quotation, and had many offers from representatives and distributors well within our industrial product mix to further our efforts throughout the Middle East.

In essence, I encourage readers to consider the Middle East as a viable export market. Cultural differences and distance often dissuade fellow Hoosier businesses from considering the Middle East, but you should know of that region’s growing affection for American-made goods reflected in the large increases overall of US and Indiana exports to the UAE, and to the Middle East in general.

A Tip:  When travelling overseas for business, minimally have your cards translated into the language of the host nation. Our translated cards were a big hit, receiving smiles and favorable comments as the cards were presented, Arabic-side up.

Although we don’t yet have a free trade agreement with the UAE, we do have favorable trade relations with that Arab nation and throughout most of the Middle East with some obvious exceptions, and do have free trade agreements with Bahrain, Israel, Jordan and Oman.

Should you wish to consider the Middle East for export growth, please contact your local ISBDC office to receive assistance in export market assessment.

Andy Reinke is the President of Foreign Targets, Inc. (FTI)  an export management company creating and managing proactive export programs for small and medium sized manufacturing firms.  This is achieved by utilizing a proven methodology:  FTI’s Core-8 Steps to Export Management. Read more about export in the ISBDC’s Exporting Your Products and Services FAQ Page.

I realize this next topic is less than festive, however considering the attention this topic has commanded over the past few years and its importance for exporting firms to grasp, I think it’s time for discussion. I’m talking about the Foreign Corrupt Practices Act of 1977 (FCPA), 15 U.S.C., §§ 78dd-1, et seq., which prohibits US nationals and firms from engaging in payments to foreign officials for purposes of securing or retaining business in foreign markets. It is one of few if any US laws that govern how US citizens interact with companies and officials outside our borders.

Whenever the topic of free trade agreements arises, detractors for trade suggest FTA’s fuel the exportation of American jobs to those nations with which we enter into such agreements.  The facts point to a much different outcome.  As Former U.S. Trade Representative Susan Schwab said at a National District Export Council Meeting in November 2008, the U.S. has a trade SURPLUS with every nation with which we’ve entered into a Free Trade Agreement if we deduct oil imports from the equation. A Wall Street Journal article also acknowledges that the U.S., on aggregate, must lower its tariff and non-tariff barriers far less than other nations when entering into bilateral trade agreements because the U.S. already has relatively one of lowest tariff levels and least cumbersome set of import regulations of any nation. What does this all mean? It means historically, FTA’s are good for American exports, good for creating and sustaining U.S. jobs and this translates similarly to our own Indiana economy.

Let’s lay out some trade facts first:  The US exported $1.28 trillion to the rest of the world in ’10, and Indiana’s share of that was $29 billion, making the Hoosier state the 14^th largest in the union. South Korea has 49 million consumers with a per capita GDP of $20,491, and is the world’s 12^th largest economy ($1.5 trilliion in GDP), all in a land mass slightly larger than Indiana. South Korea is our country’s 7^th largest trading partner for manufactured goods and services, and 5^th largest for US agricultural exports.

Impact on Indiana

The following information contains data that comes from the U.S. Department of Commerce, the International Trade Administration, U.S. and Indiana Agricultural Departments, the World Economic Forum, the American Farm Bureau Federation and from a presentation to the Indiana District Export Council on October 2011 by Michael Choi, International Trade Specialist,  U.S. Department of Commerce.

The US exported $55 Billion to South Korea in 2010 and Indiana’s share was $551 million. Although not enough to place the Asian nation among the top 10 export destinations for our state’s exports, South Korea’s imports of Indiana goods are definitely on the rise, and are expected to surge with the new trade agreement.

Auto Sector:  Indiana’s manufacturing ties to the auto and transportation sectors are well known, and our state transportation-related exports typically rank among the top three of Indiana’s exported products, being first in 2010. 9% of our exports to Korea are in the auto and transportation sector. Current South Korean tariffs on these goods average 8.3% but are expected to eventually drop to 0%. Regulatory transparencies coupled with ease in standards are expected to help Indiana’s transportation sector gain a larger presence in South Korea.

Medical Equipment:  Indiana’s 4^th largest export industry, medical instruments, may also expect to fare better in free trade with the South Korean market. Top U.S. medical equipment exports to South Korea include surgical instruments, diagnostic equipment, artificial joints and medical appliances. Current South Korean tariffs average 5.4%, but can range up to 50% depending on a product’s Harmonized Tariff schedule. Other current impediments to trade include inadequate regulatory transparency and difficulty in satisfying testing and certification requirements, which are to be significantly lessened under the trade deal.

Machinery:  Indiana’s portion of the U.S.’ $5 billion in exports to South Korea in Machinery (Indiana’s 3^rd largest export industry), was $50 million in 2010. Current tariffs levied against U.S. Machinery by the South Koreans range from 0% to 13%, averaging 7.5%. Again, difficulty in satisfying testing and certification requirements and inadequate regulatory transparency are to be streamlined and made easier for U.S. exporters of industrial machinery.

Services:   The United States typically enjoys a trade SURPLUS with the rest of the world in the increasingly vital service sector (services ranging from architecture, medical imaging and assessment, financial and service sectors, tourism, legal, insurance, technology, distribution, express delivery and education). The U.S. exports $12 billion on average to South Korea in services with nearly a two to one edge over imports by U.S. firms from South Korea.

Agriculture:  U.S. food and agricultural exports to Korea are also expected to surge due to the FTA. Indiana’s agricultural exports totaled $3.4 billion of the total $9.6 billion of Indiana’s 2010 agricultural receipts.

The American Farm Bureau Federation estimates that Indiana’s agricultural exports to Korea will increase by $39 million. Among the top winners in this new agreement which call for the elimination of nearly 2/3 of all duties for U.S. agricultural exports, are feed grains, soybeans and related products, and pork and dairy products. Food exports to Korea need to be registered with the Korea Food and Drug Administration (KFDA), and must comply with the Korean Food Code, the Korean Food Safety Code and the Korean Food Additives Code. These codes do not align with international standards to which most food products need to meet, and is one cause of difficulty for U.S. agricultural exports to Korea addressed by the FTA.

Although much of the architecture for implementing the KORUS FTA needs drafting, for more information on how the FTA with South Korea will impact your products, contact your local Indiana Small Business Development Center and let us help you assess current U.S. exports to South Korea within your product range, and how quickly the Korean duty on your products will decrease.

Recently, the KORUS-FTA was approved by Korea’s National Assembly, the last hurdle to making the agreement law in both nations. The net effect is that this agreement is a good deal for Indiana’s economy.

As the current U.S. Trade Representative Ron Kirk indicated in an article appearing in the Ft. Wayne Journal Gazatte late last month following passage of the KORUS FTA, “’Made in America’ are still three of the most treasured words in the world. It is the most powerful brand”.

Andy Reinke is the President of Foreign Targets, Inc. (FTI)  an export management company creating and managing proactive export programs for small and medium sized manufacturing firms.  This is achieved by utilizing a proven methodology:  FTI’s Core-8 Steps to Export Management. Read more about export in the ISBDC’s Exporting Your Products and Services FAQ Page.

Andy Reinke

I think fear over non-payment, and perceived inability of the would-be exporter to seek remediation over nonpayment is one of the biggest hurdles to small US firms to considering pursuit of the foreign market. It needn’t be this complex or vexing.

Review, selection and use of a variety of export finance instruments are well worth the time, and it begins with your present banker – the financial institution in which you’ve already invested your company’s trust. If they don’t have the answers in-house to address international trade concerns, seek another bank – it’s that simple. The bank in question should know about how to execute letters of credit, be able to review the documents and proposed LC’s as they come across your desk to offer advice, and ideally have corresponding relations with banks in the foreign markets you’re targeting. Too, your bank should have a Swift code – a code that is recognized and identifiable world-wide to accept and make international wire-transfers.  I say this now knowing some banks do not have such identification.

One such instrument for export is exports receivables insurance which is offered by several firms in the US in addition to the federal government. Exports receivables insurance is aptly named…an instrument that guarantees, assuming certain pre-qualifications of both foreign buyer and exporter, that payment will be forthcoming even if buyer fails to pay or the country to which the goods are exported suddenly enters financial or political turmoil. This instrument costs, but is less pricey and less arduous than the standard LC. However, due to the recent global financial crisis, pricing by for-profit export receivables insurance firms has sky-rocketed and is often unattainable or unwise for small firms to engage. EXIM, the Export Import Bank of the US, has maintained a steady pricing structure throughout the crisis, and has seen its business surge during and following the crisis, especially as more and more US firms follow the tide of developing their export business to offset a still-sluggish domestic economy.

After approval by EXIM or other comparable insurer, maintenance of the program requires monthly reporting often online, paying premiums as you go, shortly after the end of the month in which the exports shipped.

To obtain EXIM insurance, the insured (the US exporter) must perform due diligence in the process of reviewing the foreign customer is a good risk. A credit report coupled with one or more trade references from other US suppliers, depending on level of export insurance requested, is required. There are various programs available involving either single-buyer or multi-buyer policies, with the latter often the less costly assuming the export risk is spread across a wide spectrum of export customers.

EXIM has announced recently however, a new Express Insurance program that streamlines and expedites the application and foreign buyer credit decision process for a nominal increased rate. Credit reports on all buyers the exporter elects to insure are complimentary, however unlike the normal program the credit report stays with EXIM. To be eligible for EXIM coverage, the applicant must be a small business as defined by the Small Business Administration (maximum between 500 and 1500 employees for manufacturers)  with less than $5 million in export credit sales annually (excluding exports to Canada, exports under Letter of Credit or cash-in advance exports). Other qualifications are that exports must be of 50% or greater US content, and originally from the US. If your product is comprised of greater than 50% of non-US content, you’d need to select a private-sector export insurer such as Coface.

A side but tangible benefit of having export insurance is it can improve your balance sheet because lenders are more likely to advance funds against these receivables to increase your cash flow.

For additional information and consultation on these and other export finance instruments, please contact your existing bank or your local ISBDC office to connect with me directly. To view the Export Import Bank’s web address for Export Receivables Insurance, click:  http://www.exim.gov/products/insurance/index.cfm

Do your homework – contact different export receivables insurance firms to price and policy compare, and look at your anticipated annual export activity for those exports you’d put under open terms only. The longer the terms, say above 60 days, the higher the rate for insurance, understandably.

Your export methods of payment such as a Letter of Credit (LC), or export receivables insurance can provide piece of mind that payment for your exports are governed.

Andy Reinke is the President of Foreign Targets, Inc. (FTI)  an export management company creating and managing proactive export programs for small and medium sized manufacturing firms.  This is achieved by utilizing a proven methodology:  FTI’s Core-8 Steps to Export Management. Read more about export in the ISBDC’s Exporting Your Products and Services FAQ Page.

Andy Reinke

In this installment, we’ll look at one of those firms – Earthbound RV of Marion, Indiana. The company is a relatively new entrant to the RV industry, but has certainly found its niche – very high-end, luxury, towable RV’s with superior craftsmanship, design, quality and is made of 100% wood-free content (green technology). It also has a price tag to match. Its dubbed ‘Green RV of the Year (2010) by Roaming Times, and is described by Men’s Journal as a ‘Smooth & tapered highway torpedo”.

A bit about Earthbound: It’s a family owned and operated business founded by its CEO, David Hoefer, a veteran RV chieftain for over 35 years, with son Charles as the young firm’s President, mom working in accounting with two more brothers involved in production and marketing/advertising.

The RV’s are of a unique, ergonomically-focused design using the latest in high-end composites normally found in aircraft and yachts. Too, the production crew comes from the auto industry, a testament to the firm’s penchant for quality manufacturing and tight specifications.

Their entry to the foreign market came rapidly and as a direct result of foreign attendees to the RV Show in Louisville, KY in 2010 at which the firm received orders for 45 units – a robust signal by the industry for these new trailers. Distributors in Australia, China and Germany were clamoring to sign up as distributors, acknowledging Earthbound’s price point would place the towable trailers at the luxury level in each of their markets at a time of global economic uncertainty. However, the uniqueness of the product coupled with increased disposable income and leisure time in some developing markets like China meant the time was right to pursue foreign sales soon after their entry to the domestic market. A side benefit to eventual success in the Australian market would mean seasonal production demands would be eased, as their summer down-under is our winter season, something to keep in mind if readers to this blog face season production issues.

While identifying the duty and tariffs on these trailers headed to Australia and Germany were a bit more clear-cut, my first efforts were to fully determine the duty for those units heading to China. To determine the tariff and taxes, identification of the Harmonized Schedule code would be required. Fortunately, the HS schedule was easily found at http://www.census.gov/foreign-trade/schedules/b/. If you’ll recall from a prior blog post, identification of your HS code and Schedule B code (the former determines the duty/taxes imposed on US exports by foreign markets, the latter on foreign goods imported to the US), is a first step on the road to determining best export markets to assess and pursue.

Using those same HS and Schedule B codes, accessing the USA TradeOnline database quickly revealed the US has a large and increasing trade surplus with these types of towable trailers, with the EU, China and Australia being among the stronger, growing markets for US RV’s. (Contact the ISBDC to determine the HS/Schedule B Codes, foreign taxes and global trade flows for your products).

Other concerns involved making sure those interested distributors were the best fit, and payment options were attainable and well received. The considerable size of the markets in question, Australia, Germany and China, suggests limiting representation based on geographical reach was advised, and existing relations with possible competing firms needing to be known up front. Due diligence with credit reports on the distributors also is a must, since possible open credit for high-value shipments may be necessary. On this front, we explored the possibility of export – receivables insurance to guarantee payment on those exports should open credit be sought. A meeting with the Export – Import Bank of the United States was established to further answer export-related financial concerns.

The firm had already done a great deal of work in determining the standards required to meet foreign regulations which can be intense, including CE marks for electrical concerns in the EU, and the China Compulsory Certification Mark (CCC) required by China. A review of the proposed contracts by the firm’s existing legal firm was strongly advised as well.

Earthbound also needed a true account on the price of the trailers landed in China. A review and confirmation of duty, taxes (national and provincial) and freight gave a clear understanding on the price of trailers in the Chinese market. It was stressed that Earthbound have a good customs broker already established in China to avoid problems in getting the RV’s cleared through customs with the least amount taxes and tariffs possible. Prior experience in the RV field by the selected broker was highly suggested.
Finally, in keeping with my suggestion on contacting any applicable trade associations, we found the RV Industry Association often hosts trade missions to China. Benchmarking (the Core-3 step referenced in my last blog which involves contacting similar but non-competing manufacturers for added insight on other successful export programs) showed Harley Davidson’s exports to China surging. Harley Davidson, like Earthbound, is known for its luxury brand, uniquely all-American, quality product built for, like Earthbound, the well-off consumer. We’ll revisit Earthbound in the coming months from time to time to check in on their export development, but in the interim, treat yourself to a visit to their website at www.earthboundrv.com

Andy Reinke is the President of Foreign Targets, Inc. (FTI)  an export management company creating and managing proactive export programs for small and medium sized manufacturing firms.  This is achieved by utilizing a proven methodology:  FTI’s Core-8 Steps to Export Management. Read more about export in the ISBDC’s Exporting Your Products and Services FAQ Page.

Andy Reinke

Core-8 Steps to Export Development:

Core I – Export Readiness Assessment – A series of questions for consideration to determine your firm’s level of internal competence, readiness and willingness to take on the foreign market.

Core II – Foreign Target Market Research and Identification – the task of performing the due diligence in conducting primary and secondary research to identify the top few foreign market s to proactively go after for exports.

Core III – Export Benchmarking – This step involves contacting vertically or horizontally integrated manufacturers of similar, complementary products to share export market information and consider other successful export strategies.

Core IV – Foreign Market Representation -.  Through various sources, identify and select the most appropriate foreign distributor, and ask a serious of questions intended to ensure appropriate fit for foreign representation.

Core V – Promotion Strategies -  Determine the best method to pursue the foreign market – direct export in which you maintain greater control, direction and knowledge of your exports, or indirect, in which an intermediary firm acts on your behalf to develop and maintain the foreign market, allowing for what often is a less risky approach to export development.    Listings of trade shows, appropriate trade journals and other resources are reviewed.

Core VI – Assembling the Export Team -  Creating an Export Team comprised of various departments inside your firm that may be impacted by the  pursuit of foreign markets along with a few external players like a bank and freight forwarder are crucial to ensure a successful export program.

Core VII – Assessment & Adjustment -   As your export program unfolds, there will be the need to tweak, alter and amend as information from the foreign markets targeted impacts your program.  When, not if this happens, gather your internal export team (those departments in your firm impacted by pursuit of exports), to present the status of your export program on a regular basis, first on  a monthly basis in the short term, then quarterly or semi-annually once the program gathers momentum.

Core VIII – Just Do It – Export -  This last step seems like an ad for track shoes, but it’s an important step.  Many companies begin an export program during times of domestic economic uncertainty and then take their foot off the export pedal once domestic economic strength returns.  This is a grave mistake.  Maintain your export efforts regardless of the health of the US economy, treating your export customers as importantly as those in the US.  Jump in, ask the ISBDC for help along the way as necessary.

Now to the fun part – the actual case studies!

Our first example is from Fish Face Photo – an Indianapolis manufacturer of photo booths.  They contacted our central Indiana ISBDC’s office with specific questions about the documents and requisite steps involved once an order has been put through by a foreign customer.   A review of Core I, the Export Readiness Assessment, would reveal a lack of knowledge in key areas of international banking and freight cost identification, export tools that would be required to affect this shipment.

We met with Fish Face Photo at their Indianapolis office to discuss and review the order they had in hand from Spain.  We quickly realized that a proper proforma invoice (similar to a domestic quote), to include the proper Incoterms (internationally recognized terms of sale) was required to move forward.  But before we could do that, we needed to identify to right HS Code so the product could accurately be entered through customs once it reached Spain.   HS Codes (addressed under Core II of the ISBDC webinar on Export Development) are an internationally recognized 6-digit numerical system that defines each product traded between all signatory nations to the World Trade Organization – WTO.

I was surprised to learn the Spanish customer had already selected an HS code for the photo booth to be imported.  A quick review proved that that proposed HS code was not accurate, defining the product as metal –framed furniture, wherein the product actually contained no metal.  Probably not a big difference, but the HS code we identified with the assistance of the US Census bureau in Washington was more accurate to the nature and purpose of the product.  Since it’s advisable to stick with the same HS code for the product exported regardless of the export destination, it made sense to go the extra mile to make certain the product was properly identified from the get-go, and could enter the Spanish market without  a hitch (at least in terms of duty assessment).

The next task was to assemble the proforma invoice with incoterms to reflect the Spanish customer’s willingness to prepay before shipment, on an Ex-Works basis (the incoterm which is the equivalent to FOB Factory).   Fish Face Photo was lucky their first export, as prepayment on an Ex-Works basis is about the most risk-free transaction possible for an export.  We worked with Fish Face Photo to alter their own documents to include the necessary international lingo to make the shipment legitimate and understood on both sides of the Altantic.  The documents comprised a commercial invoice (similar information  included on the proforma invoice, a packing list which I use as the same information for the commercial invoice minus any reference to price, and the filing of the Shippers Export Declaration with US Customs done electronically through the forwarder in charge (this is your product’s Schedule B is required).

There are 11 incoterms possible for use in international trade, according to the 2010 version of Incoterms released this past January.  Under Core II and at the end of the Core-8 Steps to Export Development (found on the ISBDC’s Exporting FAQ Page) you’ll find references to Incoterms, proforma invoices and how to search for the difference between your products Schedule B and HS  codes.

Next up – RV’s from Northern Indiana and Dog-Chews from Central Indiana.

Andy Reinke is the President of Foreign Targets, Inc. (FTI)  an export management company creating and managing proactive export programs for small and medium sized manufacturing firms.  This is achieved by utilizing a proven methodology:  FTI’s Core-8 Steps to Export Management. Read more about export in theISBDC’s Exporting Your Products and Services FAQ Page.

With that impressive if not awakening statistic from the April 2-3 weekend edition of the Wall Street Journal, I begin my first blog – on exporting.

My intent in writing this blog is to share my experiences in helping firms develop their foreign markets, diffuse some misconceptions about America’s ability to compete head-on globally and lobby why now is the most appropriate time in US history to consider exporting. I’ll begin by way of personal and professional introductions, describe a bit of how I came into the world of trade, and what led me to start my own company.
Exporting….from Indiana? That was the question I asked back in 1986 when I first became aware that our state, Indiana, had a sizeable export business that ranked the Hoosier state among the top 10-15 states for exports in the US, a statistic we’ve enjoyed since.

At the time, I worked for the Indiana Department of Commerce in Community Economic Development and one of the programs we promoted was our export development initiatives.

Following my tenure at IDOC, I worked for a small manufacturer in Northern Indiana for several years at the end of which we received ‘Exporter of the Year Award’ from the Chamber of Commerce. A requirement by the Chamber for award, I was asked to give numerous presentations to Rotary and Kiwanis clubs in the area, and talk with other chambers and business groups on the award, the importance of exporting the local economy and how we went about exporting.

After the first few speeches, I started getting calls by those in the audience asking for more details on the export process, like how do you get paid in other currencies, how to identify a reputable sales representative or distributor, what are Incoterms and how do we ship outside of the country. Many had trouble faxing outside of the US, as some had never called another country (yes, the Internet did NOT yet exist if you newbies can relate).

After the fifth or sixth call, I looked in the yellow pages for a for-profit company that handled exporting, export development, international trade for referral and found none , not one! Not one company tending to that part of the US economy comprising 1/3rd of the increase in America’s GDP!

At that instant, I knew there was the proverbial ‘niche market’ that needed filling. Within a few months I left my job at Trinetics and formed Foreign Targets and incorporated a year later, in 1996. Foreign Targets, Inc. (FTI) became a for-profit export management company that offered small to mid-sized companies a go-to resource to help them identify, develop and maintain their foreign markets. Although somewhat of a clandestine name, the impetus behind so branding was to target specific foreign markets (rifle approach) rather than go after a large number of markets simultaneously (shot-gun approach).

Although I knew I had a marketable concept, I also knew there were no other export management companies near-by or many online (before websites came of age), so I had to pretty much invent how to craft my company, how much to charge, how many clients would suffice and how much time I could and should devote to each.
Over the next few years I tailored my strategy to offer manufacturers a 6-month, 8 step approach to export development and management. The first 6 months was obviously research – intensive, involving a good deal of interaction with the client as the 8 step process unfolded.

Although not necessarily unique in approach, a few of the core steps are exceptional in effectivess.

Through the ISBDC blog, you’re invited to read along as I share what’s worked well, and some mistakes made, over the past twenty plus years. So please join this dialogue of trade either in debate, comment or suggestion.

Andy Reinke is the President of Foreign Targets, Inc. (FTI)  an export management company creating and managing proactive export programs for small and medium sized manufacturing firms.  This is achieved by utilizing a proven methodology:  FTI’s Core-8 Steps to Export Management. Read more about export in the ISBDC’s Exporting Your Products and Services FAQ Page.