California Export Guide 2017

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18 2017 California Export Guide
Whether you are a newcomer to selling inter-
nationally or a seasoned exporter, your global
business expansion goal is to create a win-
win solution with global buyers to result in
increased sales and profits.
Diversify Your Business
According to the U.S. International Trade Adminis-
tration, nearly 66% of small- and medium-sized export-
ers hit a growth plateau because they are too focused
on a single foreign market. Expanding into new global
markets can be a good strategic move. Specifically, a
company can protect against concentration with a
single foreign buyer and the associated economic and
political volatility, and currency fluctuations. Early
entry into a market also can set a higher barrier of entry
to defend against competition.
Exporters should be sure to consider the procure-
ment side of the equation, too. Concentrating volumes
can increase negotiating power and reduce per unit
purchasing, processing, packaging and shipping costs,
resulting in higher margins. On the flip side, diversify-
ing suppliers reduces reliance on a single provider,
and may protect against other logistics issues, such
as supplier default and port availability problems.
Companies need to weigh both sides of this equation
and determine the factors most important to them.
Anticipate Borrowing Needs
Don’t wait until a change in buyers’ needs or market condi-
tions necessitates scrambling to access additional financing.
Put those arrangements in place early, and look for a bank that
specializes in export financing options, such as ExportWork-
ing Capital Guaranty and Foreign Buyer Insurance programs
offered by the Small Business Administration and the Export
Import Bank.
Credit insured trade supply chain financing is another
attractive solution. This alternative appeals to companies
needing specialty financing programs that usually aren’t
available through traditional bank financing or government-
backed financing programs.
Be Flexible with Payment Terms
Negotiating sales contracts in local currency can strengthen
contract bargaining power and enhance profit margins. It also
adds transparency with buyers and eliminates the need for
pricing concessions to protect against currency fluctuation.
Forward contracts are another way to mitigate currency risk
and protect hard earned profit margins.
Understand the various international methods of payments,
the levels of risk mitigation they provide, and how they impact
cash flow.Wire transfers, letters of credit, bankers’ acceptances,
documentary collections, and open accounts all have their
place. As conditions warrant, consider more relaxed terms to
reward a favored buyer in a stable country, or adversely “ratchet
back” when buyer or country risk dictates.
Network to Expand Your Global Market Knowledge Base
Work with an experienced international banker who will
invest the time to understand the business model and associ-
ated risks, and offer effective solutions to help conduct global
transactions. Establish relationships with other resources such
as local, state and federal agencies that offer export assistance
and educational programs. It’s also helpful to get involved
with trade organizations, such as District Export Councils,
World Trade Centers, U.S. Export Assistance Centers, SBA, and
the EXIM Bank. Participating in events with these groups can
provide insight into what your peers are doing, and what best
practices have worked for them.
Exporters that embrace globalization know there are both
challenges and opportunities. The tradeoffs can be worth it if
they are successfully navigated.With the right business tactics,
financial services, and support system in place, a company en-
sures it is on track to distinguish itself from its competitors both
in terms of sales growth and profits.
Rachel A. Krittman is Vice President - International Bank-
ing at California Bank & Trust and Sandra Arguello is Vice
President and Product Manager for International Banking
and Foreign Exchange for ZB, NA (California Bank & Trust, a
division of ZB, N.A. Member FDIC).
BecomeaMore CompetitiveGlobal Supplier
By Rachel A. Krittman & Sandra Arguello