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2017 California Export Guide


hether 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