ABSTRACT
To succeed in exporting, you must first identify the most
profitable international markets for your products or services.
Without proper guidance and assistance, however, this process can
be time consuming and costly -- particularly for a small
business.

The U.S. federal government, state governments, trade
associations, exporters' associations and foreign governments
offer low-cost and easily accessible resources to simplify and
speed your foreign market research. This chapter describes those
resources and how to use them.

FEDERAL GOVERNMENT RESOURCES
Many government programs and staff are dedicated to helping
you, the small business owner, assess whether your product or
service is ready to compete in a foreign market.

The U.S. Small Business Administration
Many new-to-export small firms have found the counseling
services provided by the SBA's Service Corps of Retired
Executives (SCORE) particularly helpful. Through your local SBA
District office, you can gain access to more than 850 SCORE
volunteers with experience in international trade.

"Our SCORE counselor is really like a big brother to us and
our company," says Jim Hadzicki, Vice-President of San
Diego-based Revolution Kites, a recreational kite manufacturer.
Exports now account for 24 percent of their sales in just three
years. "I recently went on a trip to Tokyo to line up a
distributorship. Our SCORE counselor helped me list our
objectives, what I was to do and ask about and even told me what
gift I should take to the Japanese representative," says
Hadzicki.

Two other SBA-sponsored programs are available to small
businesses needing management and export advice: Small Business
Development Centers and Small Business Institutes affiliated with
colleges and universities throughout the United States:

Small Business Development Centers (SBDCs) offer counseling,
training and research assistance on all aspects of small business
management.
The Small Business Institute (SBI) program provides small
business owners with intensive management counselling from
qualified business students who are supervised by faculty. SBIs
provide advice on a wide range of management challenges facing
small businesses -- including finding the best foreign markets
for particular products or services.

The U.S. Department of Commerce

The U.S. Department of Commerce's (DOC) International Trade
Administration (ITA) is a valuable source of advice and
information. In ITA offices throughout the country international
trade specialists can help you locate the best foreign markets
for your products. Oklahoma exporter OK-1 Manufacturing Co. has
found the foreign market research available through the ITA
extremely useful:

"The Oklahoma District ITA office prepared a market research
study to determine whether we should export our fitness accessory
items to Japan," says Sherry Teigen, OK-1 Manufacturing Co.
export manager. Today, the company exports to Japan in addition
to 20 other countries. Since it began exporting, the company
staff has grown by 75 and Sherry's husband, OK-1's President,
Roger Teigen, won the 1991 SBA Exporter of the Year award.

District Export Councils (DECs) are another useful
ITA-sponsored resource. The 51 District Export Councils located
around the United States are comprised of 1,800 executives with
experience in international trade who volunteer to help small
businesses export. Council members come from banks,
manufacturing companies, law offices, trade associations, state
and local agencies and educational institutions. They draw upon
their experience to encourage, educate, counsel and guide
potential, new and seasoned exporters in their individual
marketing needs.

The United States and Foreign Commercial Service (US&FCS)
helps U.S. firms compete more effectively in the global
marketplace with trade specialists in 69 United States cities and
70 countries worldwide. US&FCS offices provide information on
foreign markets, agent/distributor location services, trade leads
and counseling on business opportunities, trade barriers and
prospects abroad.

The United States Department of Agriculture
If you have an agricultural product, you should investigate
the U.S. Department of Agriculture's (USDA) Foreign Agricultural
Service (FAS). With posts in 80 embassies and consulates
worldwide, the FAS can obtain specific overseas market
information for your product. The FAS also maintains sector
specialists in the United States to monitor foreign markets for
specific U.S. agricultural products.
Most state commerce and economic development offices have
international trade specialists to assist you. Many states have
trade offices in overseas markets. Dial Tool and Manufacturing
of Franklin Park, Illinois, found the Illinois State office in
Hong Kong very helpful:

After visiting the Illinois State office in Hong Kong, Dial
Tool and Manufacturing President Steve Pagliuzza reports that he
was able to sign on sales reps for his company's metal stamping
equipment: "My state office in Hong Kong gave me several names of
potential reps. We eventually signed them on and are now
successfully exporting to Asia, in addition to Europe, Canada and
Mexico. In four years, 15-20 percent of our sales now come from
exporting."

Port Authorities are a wealth of export information.
Although traditionally associated with transportation services,
many port authorities around the country have expanded their
services to provide export training programs and
foreign-marketing research assistance. For example, the New
York-New Jersey Port Authority provides extensive services to
exporters including XPORT, a full-service export trading company.

PRIVATE SECTOR RESOURCES


In addition to government-supported resources, private
sector organizations can also provide invaluable assistance.

Exporters' Associations

World Trade Centers, import-export clubs and organizations
such as the American Association of Exporters and Importers and
the Small Business Exporter's Association can aid in your foreign
market research.

Trade Associations

The National Federation of International Trade Associations
lists over 150 organizations in the U.S. to help new-to-export
small businesses enter international markets. Many of these
associations maintain libraries, databanks and established
relationships with foreign governments to assist in your
exporting efforts.
More than 5,000 trade and professional associations
currently operate in the United States; many actively promote
international trade activities for their members.
The Telecommunications Industry Association is just one
association which leads frequent overseas trade missions and
monitors the pulse of foreign market conditions around the globe.
Whatever your product or service, a trade association probably
exists that can help you obtain information on domestic and
foreign markets.
Chambers of Commerce, particularly state chambers, or
chambers located in major industrial areas, often employ
international trade specialists who gather information on markets
abroad.

HOW TO GATHER FOREIGN MARKET RESEARCH


Now that you know where to begin your research, you should
next identify the most profitable foreign markets for your
products or services. You will need to:

• classify your product;
  
• find countries with the largest and fastest growing
  markets for your product;
  
• determine which foreign markets will be the most
  penetrable;
  
• define and narrow those export markets you intend to
  pursue;
  
• talk to U.S. customers doing business internationally;
  
• research export efforts of U.S. competitors.
  
  
  Classifying your product
  
  The Standard Industrial Classification (SIC) code is the
  system by which the United States government classifies its goods
  and services. Knowing the proper code for your product or
  service can be useful in collecting and analyzing data available
  in the United States.
  Data originating from outside the United States -- or
  information available from international organizations -- are
  organized under the Standard International Trade Classification
  (SITC) system, which may assign a different code to your product
  or service.
  Another method of classifying products for export is the
  Harmonized System (HS). Knowing the HS classification number,
  the SIC and the SITC codes for your product is essential to
  obtaining domestic and international trade and tariff
  information. DOC and USDA trade specialists can assist in
  identifying the codes for your products. The United States
  Bureau of the Census (USBC) can help identify the HS number for
  your product.
  
  Finding countries with the largest and fastest growing markets
  for your product
  
  At this stage of your research, you should consider where
  your domestic competitors are exporting. Trade associations can
  often provide data on where companies in a particular industry
  sector are exporting their products. The three largest markets
  for U.S. products are Canada, Japan and Mexico. Yet these
  countries may not be the largest markets for your product.
  Three key United States government databases can identify
  those countries which represent significant export potential for
  your product: SBA's Automated Trade Locator Assistance System
  (SBAtlas), Foreign Trade Report FT925 and the U.S. Department of
  Commerce's National Trade Data Bank (NTDB).
  SBA's Automated Trade Locator Assistance System (SBAtlas) is
  offered only by the U.S. Small Business Administration and
  provides current market information to SBA clients on world
  markets suitable for their products and services. This valuable
  research tool supplies small business exporters with information
  about where their products are being bought and sold and which
  countries offer the largest markets. The Country Reports detail
  products imported and exported by various foreign nations. Data
  are supplied by the DOC's USBC and member nations of the United
  Nations. This information can be obtained through a SCORE
  counselor at the SBA District and Regional Offices and at SBDCs
  and SBIs. This service is free to requesting small businesses.
  Foreign Trade Report FT925 gives a monthly country-specific
  breakdown of imports and exports by SITC number. Available by
  subscription from the Government Printing Office, the FT925 can
  also be obtained through DOC ITA offices.
  The National Trade Data Bank (NTDB) contains more than
  100,000 U.S. government documents on export promotion and
  international economic information. With the NTDB, you can
  conduct databank searches on country and product information.
  NTDB can be purchased by subscription and used with a CD-ROM
  reader, or can be used at Federal libraries throughout the United
  States. DOC ITA offices will also conduct specific NTDB searches
  to meet your foreign market research needs.
  Once you learn which are the largest markets for your
  products, determine which are the fastest growing markets. Find
  out what demographic patterns and cultural considerations will
  affect your market penetration.
  Several publications provide geographic and demographic
  statistical information pertinent to your product: The World
  Factbook, produced by the Central Intelligence Agency; World
  Population, published by DOC's USBC; The World Bank Atlas,
  available from the World Bank; and the International Trade
  Statistics Yearbook of the United Nations. Volume Two of this
  U.N. publication (available at many libraries) lists
  international demand for commodities over a five-year period.
  
  DETERMINING THE MOST PENETRABLE MARKETS
  
  
  Once you have defined and narrowed a few prospective foreign
  markets for your product, you will need to examine them in
  detail. At this stage you should ask the following questions:
  
  
  
  how does the quality of your product or service compare
  with that of goods already available in your target foreign
  markets?
  
  is your price competitive in the markets you are
  considering?
  
  who are your major customers?
  
  
  Answering these questions may seem overwhelming at first,
  but many resources are available to help you select which foreign
  markets are most conducive to selling your product.
  The DOC's ITA can link you with specific foreign markets.
  ITA offices are part of the US&FCS and communicate directly with
  FCS officers working in United States Embassies worldwide.
  FCS staff and in-country market research firms produce
  in-depth reports on selected products and industries that can
  answer many of your questions regarding foreign market
  penetration.
  One small business exporter who regularly uses foreign
  market information obtained through the DOC's US&FCS is
  Fabri-Quilt Inc. of North Kansas City, Missouri.
  
  According to Fabri-Quilt President Lionel Kunst, "When I
  decide to enter a foreign market, the Commerce Department ITA
  office in Missouri sends information on my company to the Foreign
  Commercial Service Officer in the country where I want to export.
  They send me back information on that particular country and even
  make appointments for me when I decide to visit the market
  myself." Of the product line Fabri-Quilt exports, 25 percent of
  their sales can be attributed to exporting.
  
  You can also order a comparison shopping service report
  through ITA district offices. The report is a low-cost way to
  conduct research without having to leave the United States.
  SBA's and DOC's Export Legal Assistance Network (ELAN)
  provides new exporters with answers to their initial legal
  questions. Local attorneys volunteer, on a one-time basis, to
  counsel small businesses to address their export-related legal
  questions. These attorneys can address questions pertaining to
  contract negotiations, licensing, credit collections procedures
  and documentation. There is no charge for this one-time service,
  available through SBA or DOC district offices.
  Trade Opportunities Program (TOPs) of the DOC can furnish
  U.S. small businesses with trade leads from foreign companies
  that want to buy or represent their products or services. These
  trade leads are available in both electronic or printed form from
  the DOC. Participating companies must pay a modest fee to gain
  access to this service.
  Other important issues about the target foreign markets you
  should explore are:
  
  
  political risk considerations,
  the cultural environment, and
  whether any product modifications, such as packaging or
  labelling, will make the product more "exportable."
  
  
  One U.S. poultry producer discovered it had to modify its
  product to make it more palatable to Japanese consumers:
  
  Atlanta-based Gold Kist Inc. found that, to be successful in
  Japan, they needed to cut and package their chicken parts to meet
  Japanese consumer preferences. That change required substantial
  modification in Gold Kist's operations. The alteration paid off:
  Gold Kist's Don Sands reports, "In 1988, we shipped 5.3 million
  pounds of poultry to Japan, 9 million in 1989 and 12 million in
  1990."
  
  
  Identifying market-specific issues is easily accomplished by
  contacting foreign government representatives in the United
  States. Commercial posts of foreign governments located within
  embassies and consulates can assist you in obtaining specific
  market and product information.
  American Chambers of Commerce (AmChams) abroad can also be
  an invaluable resource. As affiliates of the United States
  Chamber of Commerce, 61 AmChams, located in 55 countries, collect
  and disseminate extensive information on foreign markets. While
  membership fees are usually required, the small investment can be
  worth it for the information received.
  Another fundamental question to ask country-specific experts
  is what market barriers, such as tariffs or import restrictions
  (sometimes referred to as non-tariff barriers), exist for your
  product? Specialists at U.S. Trade Representative (USTR) should
  be consulted on trade barriers.
  Tariffs are taxes imposed on imported goods. In many cases,
  tariffs raise the price of imported goods to the level of
  domestic goods. Often tariffs become barriers to imported
  products because the amount of tax imposed makes it impossible
  for exporters to profitably sell their products in foreign
  markets.
  Non-tariff barriers are laws or regulations that a country
  enacts to protect domestic industries against foreign
  competition. Such non-tariff barriers may include subsidies for
  domestic goods, import quotas or regulations on import quality.
  To determine the rate of duty, you will need to identify the
  Harmonized Tariff section which corresponds to the product you
  wish to export. Each country has its own schedule of duty rates
  corresponding to the section of the Harmonized System of Tariff
  Nomenclature, I-XXII.
  
  
  DEFINING WHICH MARKETS TO PURSUE
  
  
  Once you know the largest, fastest growing and most
  penetrable markets for your product or service, you must then
  define your export strategy.
  Do not choose too many markets. For most small businesses,
  three foreign markets will be more than enough, initially. You
  may want to test one market and then move on to secondary markets
  as your "exportise" develops. Focusing on regional, geographic
  clusters of countries can also be more cost effective than
  choosing markets scattered around the globe.
  
  How do I determine which countries would be good markets for my products?
  -The EA Country Information section provides information on textile and apparel markets in selected countries.
  
  -Industry Sector Analyses (ISAs) contain succinct, international market information on specific industries that can help U.S. exporters determine market potential, market size, and competitors for their products and services.--You must register with the U.S. Commercial Service to access this database.--
  
  -Country Commercial Guides (CCGs) are comprehensive reports that contain information on the business and economic situation and political climate in overseas markets, as well as general information on marketing, trade regulations, investment climate, and business travel.
  
  -The U.S. Department of Commerce Textile and Apparel Team provides a wide variety of export assistance, products, services, and programs for U.S. textile and apparel exporters. Team members are international trade specialists with expertise in textiles and apparel and are located in major U.S. textile and apparel markets in the U.S. and abroad.
  
  -The U.S. Commercial Service provides timely, customized research on foreign markets and their receptivity to U.S. products. Contact your local U.S. Export Assistance Center for more information.
  
  -EA Hot Issues Section contains current issues affecting U.S. textile and apparel exporters.
  
  -Analyze the trade statistics to find out which countries are currently buying U.S. textile and apparel products.
  
  -U.S. Census Bureau's International Data Base (IDB) contains demographic and socioeconomic data for countries.
  
  -STAT-USA Internet contains current and historical trade-related releases, international market research, trade opportunities, country analysis, and the National Trade Data Bank (NTDB). --Access to files for subscribers only.--
  
  -Search the Internet, many countries maintain web pages with local business and market information.

Published: January 2007
Region: USA
Format: Editorial
SKU: infpu0001750