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near west side intro to exporting

Tuesday 21 December, 2010

The Industrial Council of Nearwest Chicago hosted this Introduction to Exporting Jeff Dzuira, V.P.-International Sales for New Medical Technologies, Inc. kicked off with his presentation Introduction to Exporting 120710R2 In addition to his presentation, here are a few other nuggets.  Pay attention to approvals like those provided by Underwriters Laboratories, although each country can add their own requirements.  Don’t dismiss the power of “Made in the USA.”  Big markets are not necessarily the best 1st markets.  The speed to market varies by product, country, & many other reasons.  Although technologies like Skype are the great equalizers, personal face time is still required & different countries work at different paces.  Always partner with the principal of your partner & require them to create a business plan for your product.

Cindy Biggs of the local Export Assistance Center made this presentation US Commercial Service Intro to Exporting presentation Additionally she reminded us the US is still the world’s largest manufacturer with 286K manufacturers creating $1.6TR worth of goods & manufacturing output has doubled since 1983.  The National Export Initiative encourages companies to focus on the BRIC markets which account for 60% of the market growth in the world.  40% of exports benefit from  free trade agreements.  Less than 2% of US firms export, & 2/3 of those export to only 1 country.

John Nevell of the Small Business Administration offered their part SBA Intro to Exporting presentation & SBA Intro to Exporting trade finance presentation Because only 1 in 100 countries export regularly, that makes it tough for business bankers unfamiliar with these transactions.  Letters of credit are expensive because of the fees involved.  The SBA absorbs the risk of export transactions, ultimately at taxpayer expense by the way.  The SBA will finance 100% @ 2-3 % on revolving lines of credit for 12+ months.

Mike Howard, Director of the Midwest Regional Office of the Export-Import Bank also made a presentation, but their marketing department in Washington, D.C. wanted me to refer people to their website & haven’t put Mike’s presentation up there yet, so here’s what he had to say.  ExImBank’s goal is to take international risk out of the financing equation while recognizing the differences between international risk & under-capitalization.  ExImBank does not take on performance risk.  Although ExImBank is known as “Boeing’s Bank,” they do no military transactions & no transaction is too small for them.  The average transaction is only $30-40K.  Client McDavid, who makes orthotic devices, has 200-300 foreign doctors with #00-$1K letters of credit.  ExImBank doesn’t take on 100% of the risk because they need their clients to have at least a little skin in the game.  Products they work with must be made in the USA & sold to a foreign buyer.  Consult their Country Limitation Schedule so that you don’t chase down bad deals in countries where you won’t be able to get financing.  Being naturally conservative, midwesterners tend to prefer cash-in-advance & letters of credit, but these might not be necessary with ExImBank programs.  Paying .5% for a 60-day account receivable is much less hassle than administering a letter of credit.  ExImBank doesn’t make bad deals good:  they make good deals bankable.

Q&A

  • In seeking export financing , consult your banker 1st, then the SBA, & finally ExImBank.
  • These programs don’t finance marketing, PR, or post-shipment exposure-they simply finance collections.
  • Since these programs protect against many global risks, they are potential alternatives to letters of credit.
  • Because the quality of Dun & Bradstreet reports declines outside of North America, buyers are qualified based on their placement on the country limitation schedule.  For $100K-300K deals, they require a US Dept of Commerce International Company report.  For $300K+ deals, they require seeing the buyers financial reports.
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