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Minimize Foreign Trade Risks with These 10 Tips

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Minimize Foreign Trade Risks with These 10 Tips

Does your company follow a strategy to go global? International expansion brings endless opportunities. Statistics show that companies that export boost their productivity by 34% on average over the first year. They are also more likely to survive in the long term when compared to companies with a local focus. 

However, we must emphasize the fact that foreign trading comes with risks. Currency, credit, intellectual property, transport, logistics, ethics… you’ll be dealing with a lot throughout this journey. Being aware of these risks and taking steps to minimize them will ensure the success of your brand’s international trade management.

10 Tips on How to Minimize Foreign Trade Risks 

Make Sure Your Products Are Allowed for Distribution

This is the first thing you need to check: are you allowed to trade with your products in the respective country? For example, the EU has strict regulations that prevent many goods from China from being imported. Each country has its rules, which your business must respect. Otherwise, you would waste a lot of time and resources planning an impossible expansion project. 

You can get familiar with the rules by reading relevant laws and regulations or contacting the customs services.  

Focus on the Legal Aspects of Business Expansion

Each country has its own regulations regarding businesses from abroad. Legislators set the legal framework and conditions for FFcustomers, sales, and particularities regarding the industry. It’s important to be aware of all these details ahead of time. When designing your strategy and drafting the initial contracts, you should make sure you stay within the legal framework of the country where you expand the brand. In addition, you should be aware of potential legal disputes and their solutions. 

Most business owners hire lawyers in their respective countries. A lawyer from your own country can also make connections and give you the details you need.   

Get Shipping Insurance

Everything looks well on paper. You consider the costs of production, transport, marketing, sales, and everything else related to selling your goods abroad. But there’s a risk that business owners often forget: damage during shipping. Items may break or get lost during transport. Your shipment may become a subject of theft or even vandalism. Accidents and contamination happen during transport all the time. If you don’t get good insurance for your shipment, you risk losing a lot of money. 

Proper insurance is not cheap. You should talk to several agencies to get the best offer on international shipments. We recommend using the best finance apps to plan all costs, including insurance over a longer period of time. These apps will help you calculate a decent budget and determine a final price that won’t leave much space for losses. 

Consider All Currency-Related Things

When planning foreign trade financing, you’re guided by the official currency in your own country. You focus on evaluating the risks related to credit, but as most business owners, you might forget about one thing: currency conversions may initiate losses, too. 

The COVID-19 crisis hasn’t been kind in this aspect. In March 2020, emerging-market currencies faced losses of up to 30%. That’s something that nobody could have predicted. However, you can analyze the movement of relevant currencies and estimate potential losses. You might need to work with a financial expert to make these evaluations.  

Evaluate the Risk of Protectionism

Trade protectionism is a policy for protecting domestic industries from foreign invasion. If, for example, a particular country stimulates the domestic flour milling industry, it will impose import quotas, tariffs, and other handicaps on foreign traders. Governments do this because they don’t want foreign products to drop the market prices and get the domestic industries in trouble. 

If you plan for global exposure, you have to learn about these policies. You must take the additional expenses into consideration, so you’ll evaluate a realistic final price. Will it be acceptable for the living standard of the respective country?

Register the Corporate Names and Trademarks

When doing business abroad, you risk violating another brand’s intellectual property rights. You can avoid that by registering your brand’s names and trademarks. If that process goes undisturbed, you can feel free to offer the products on the respective market. 

Consider the Risk of a Changing Market Environment

No market situation is stable and rigid for all times. You will develop a general strategy, which will be based on solid international risk management. But no matter how well you predict potential risks and future circumstances, you cannot be 100% sure that you did it properly. 

In Deloitte’s Global Trade Management Survey, none of the Swiss chief financial officers who participated thought that the global trade environment would become less complex. Only 15% of them said they expected the conditions to remain the same. 

Your company must continuously review the strategy and make the needed adjustments as the market circumstances evolve.   

Evaluate Foreign Ethical Standard

When offering your products on a global market, you should think about the differing ethical standards that you’ll face. For example, Israel has a thriving vegan culture. It might not be a good idea to trade fur there before evaluating the risk of getting your brand dragged through discussions as an unethical one. 

Get well informed about the customs and social conditions in the country where you plan to expand. 

Invest Time and Resources on Collaboration

Business owners often neglect the need to get comprehensive advice through collaboration with foreign lawyers and governmental services. They want to save time and money, or they simply forget that getting insider information is crucial before international expansion. 

You need to talk to experts who will explain the laws and regulations. You might need finance experts from abroad as well. In addition, you have to collaborate with industry insiders who know the market and can help you build a solid network of connections.

Get Acquainted with Foreign Business Customs

You may be used to a direct, friendly approach with a bit of humor in the mix. But in a foreign country, such an approach may be considered unserious or even offensive. Intercultural differences are a major factor in foreign trading success. 

You have to get acquainted with business etiquette when entering a new market. You can find this information online, but it’s best to hire a business advisor from the country in question. You’ll get proper guidance from someone who knows the target region and the communication etiquette in the particular industry. 

The country’s culture, politics, and economy are also important. Learn as much as possible, so you can start and maintain a productive conversation with potential partners. 

Foreign Trade Is a Complex Endeavor

Yes, it will be a rewarding experience for you as a business owner. With the right approach, you’ll take your brand towards substantial growth. However, you have to conduct basic research regarding the risks you’ll face during the expansion. This is a process that requires thorough planning, so don’t rush through it.

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James Dorian is a technical copywriter. He is a tech geek who knows a lot about modern apps that will make your work more productive. James reads tons of online blogs on technology, business, and ways to become a real pro in our modern world of innovations.

economy

Back to Growth: U.S. Business Leaders Have Rosy Outlook for Economy

The COVID-19 pandemic has affected every aspect of our work and life.

Business executives have had to quickly reconfigure operations, and millions have had to unexpectedly work from home or cease work entirely. Videoconferencing has become the killer app, and Zoombombing became a new privacy concern.

Despite the widespread health and business challenges brought on by the coronavirus, two-thirds of U.S. business leaders are optimistic the domestic economy will recover within a year, according to a survey TMF Group recently released.

It’s an encouraging sign that business executives in the U.S. are expressing this type of optimism, particularly based on the unprecedented challenges experienced throughout the economy over the last few months. This group was obviously very confident before the onset of the pandemic, and they now seem eager to not only restart their businesses but help reignite the economy as well.

We conducted the survey in the middle of April to gain insight into how companies plan to navigate these uncertain times. More than 40 percent of the 300 decision-makers who took part in the poll work in companies with more than 5,000 employees. Most of the respondents (85%) said their companies do business outside the United States.

Nearly a quarter of respondents (23%) expect a V-shaped economic recovery, meaning a dramatic bounce to pre-virus activity by the end of 2020 following the sharp collapse. Only a small minority (12%) anticipate the economic impact of the pandemic to the last two years or more.

Looking beyond the U.S., business executives were a little less optimistic but still positive: 56% of respondents said the global economy would recover within a year.

It may be easy for critics to judge the survey takers as stereotypical American optimists, but I believe their confidence is grounded on some key facts. The economic shock has been largely demand-driven, as travel restrictions and government stay-at-home orders shut down wide swaths of the U.S. and global economies. Many of the world’s governments acted quickly to offset the economic damage. In the U.S., the federal government and central bank organized a massive stimulus package and pumped trillions of dollars into financial markets. More than 60% of respondents said the financial support to workers and businesses in the U.S. has had a very positive or somewhat positive effect on their companies.

Now, as states allow more businesses to reopen, consumers are eagerly venturing out despite the ongoing health risks. As consumer and business demand rebound, companies will begin hiring again.

Indeed, business decision-makers are confident their businesses will rebound quickly. More than half say their companies will return to normal operations within six months.

In times of crisis, there’s a premium on bold leadership and decisive action. Resilient leaders continue to mount appropriate responses to the global pandemic while charting paths to recovery.

The survey underscored that the pandemic has forced business to rapidly evolve. Many are moving ahead to reassess, reimagine or reinvent their businesses. Thirty-six percent say they plan to accelerate plans for international expansion, and 32% plan to seize domestic growth opportunities.

It’s a positive sign that the strategic imperative to go global remains strong because COVID-19 has dealt a serious blow to the international system. The World Trade Organization predicted in April that world merchandise trade would plummet between 13% and 32% this year.

But the factors that have driven globalization for several centuries have not disappeared. People have been driven to seek profit internationally since the earliest days of the Silk Road, and this instinct will continue. Furthermore, the spirit of international cooperation has been strong in the response to the pandemic. Companies, government agencies and nongovernmental organizations are working across borders to solve problems at scale, such as developing a vaccine for the coronavirus.

A big motive for international expansion is the diversification of supply chains, cited by 35% of respondents. The coronavirus has interrupted the flow of goods across borders, from raw materials to finished products. The disruption has vividly illustrated that today’s highly interlinked, international supply chains have more potential points of failure and less margin for error for absorbing delays and disruptions.

Reducing dependence on one country or region is a priority. Diversifying your supplier base may increase costs in the short-term but will make your network more flexible and agile and potentially reduce the economic shock of future disruptions.

The outbreak of COVID-19 forced business to reassess every strategic objective and business plan. The health crisis has exposed vulnerabilities and created unforeseen challenges.

As businesses around the world consider how they can return from the economic crisis unleashed by COVID-19, the survey results provide some food for thought. Expanding internationally or domestically in uncertain times, for instance, may seem counterintuitive but could also fuel faster growth. Severe adversity provides real perspective. It is possible to find strength and confidence in the face of real hardship.

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TMG Group is an international professional services firm that provides administrative support services across multiple jurisdictions.

overseas

7 Tips For Starting A New Business Overseas

Moving abroad has been the dream of many people. Instead of traveling for a vacation, you can move to another country and establish your life there. Setting up a business is one of the best ways to settle abroad. But what are the odds that your business will succeed? That is the worry for most people who intend to start a business abroad.

This article aims to give you hope and remind you that it is still possible to do business overseas. Once you are set, you can travel to any country that you dream of living in and start your establishment. All you need is a market for your products and comply with the local government regulations. On top of that, be aware that sometimes you may be far from your establishment or home if you do not intend to move permanently.

These seven tips should help you to successfully run any business of your dream in a foreign country.

Pick Your Ideal Destination:

Before you can travel and start your trade overseas, you must be specific about the place you want to settle. Many factors will determine your destination. The climate of the region can so much affect how you cope with the transition. For instance, if you come from the tropical regions, moving to the colder regions might be a harsh encounter, and you will take time to adapt.

You would also want to research the economic and political stability before you move your investment there. You cannot put up your business in a place where you cannot sleep peacefully or are not sure if the product value will fall and lose your investment.

Learn the Local Language and Culture:

When entering into business, you should expect to interact with the local community. People are always skeptical when it comes to new businesses. They want to learn your business model, treat them, and your attitude toward their way of life. As you must be aware, nobody wants to give up on their culture.

Therefore, your business idea should not cross the customs of the people in the country you want to settle. Learning the local language makes it easy to blend with people and understand each other – improving your services to the consumers. However, the language will come in slowly when you finally settle.

Evaluate the Market:

Market research is essential when starting up a business abroad. What do people like? How specific are they when they buy their products? What pulls them to other brands? In your research, you need to understand two things. First, you should know who your ideal customer is and what they want. You also want to learn some things about your competitors.

How has the product you intend to launch been doing in the past – or anything similar? Knowing other traders’ performance in your industry will help you understand the growth potential of any new investment in the region. If your competitors have had some growth, you can invest in the industry and acquire customers.

Legalize Your Operation:

Each country on the planet has its laws regarding business operations. You should, as a fundamental step, register your company abroad when starting. Later on, you will want to register trademarks as well for your convenience. Inquire about business registration and licensing requirements, because in some regions, they are offered separately.

For small businesses and operations like retail and supermarkets, you may only need a local business license to operate. However, if you are into manufacturing, assembly, and supplies, you will need to register a company. You can consult an attorney about the process or visit a registered company formation agent to complete the registration process.

Expand Your Network:

Connections matter a lot in every aspect of our lives. In business, we need to engage with people who know the surroundings and the requirements we need to fulfill to ensure that we run our ventures smoothly. When you plan to move abroad, you should get in touch with businesses and people who can help you start.

Relationships also create lasting trust between you and your network. The network you have can support you in many ways through your business and provide any assistance you may need during challenging moments. It would help if you did not ignore your competitors as they are vital for the growth of your business.

Start with Freelancers:

Managing employees might be another issue people worry about when thinking of setting up a business overseas. How will you compensate your workers? What terms do you need in a foreign land? What about taxes and insurance? All these things might consume your time, money, and brains.

Managing employees has never been easy, and it is not going to be any time soon. As a startup, you should think of ways to run your business without formal workers at your premises. The initial stages of a business setup may not need workforce until you establish a customer base. Therefore, you are better off paying freelancers for the available tasks and pay them hourly or on daily wage agreements.

Set Up a Website:

We are in the 21st century when digital marketing matters in all business sectors. As a startup, you want to reach more prospects both locally and through the states and beyond boundaries. Various marketing channels are essential, but you need to reach more customers online through social media, content marketing, and PPC. It would help if you did not forget about SEO and the long-term customer flow.

However, all forms of digital marketing have something in common. Consumers interested in your ventures need to click on a link or button to read more about your business and products. You must, therefore, have a website for people to learn more and interact with your brand. Ensure that you have your contact information on the site, and make it easy to access mobile devices.

In Summing Up

Moving abroad to start a business is an awesome idea. Therefore, you should make sure that everything you will be doing is compliant with the local authority laws and consumer expectations to sustain growth. Research is essential, and preparation in every aspect is mandatory. Give no room to chances, but exploit every opportunity to grow.

Report: Global Expansion Addressing Talent Recruitment for U.S. Tech Companies

A report released by Velocity Global revealed an interesting approach U.S. technology companies are planning to tap into a broader talent pool. The State of Global Expansion 2019 report, which surveyed 500 U.S. and 500 UK tech companies, confirmed 85 percent of firms plan to implement global expansion efforts in markets known for having the highest potential for the best global talent, such as Europe (23%) and Asia (23%).

“The survey provides a fascinating snapshot of the way U.S. tech firms are feeling about their global ambitions,” CEO of Velocity Global Ben Wright said. “It reveals an outward-looking sector that has the confidence to pursue growth internationally and recognizes these companies understand the benefits that global expansion can bring to businesses.”

“Crucially, the businesses we polled recognize that when it comes to tech, people are everything,” Wright continued. “Many of them are expanding overseas not just because U.S. tech carries with it a reputation for innovation and excellence, but also because they want to ensure they have a presence in markets with the brightest talent.”

The survey also revealed talent recruitment continues to be a primary challenge above employee immigration management, long-distance client communication, finding expert consultancy, and managing new payroll processes. International expansion is the common solution among U.S. tech companies, as more results from the research confirmed companies seeking to add talent are looking beyond U.S. borders, and into foreign markets. Out of the 54 percent surveyed companies operating strictly in the U.S., the report revealed that this number will drop to only 22 percent by the end of 2019.

“It’s understandable that some businesses continue to have reservations about taking those first steps into unfamiliar overseas markets. Yet more often than not, the myriad opportunities outweigh the risks. And with the right advice and an expert partner on hand to simplify processes, it can be hugely rewarding and the route to future growth.”

To read more about the report’s findings, visit: VelocityGlobal.com