International Business: Exporting

Exporting seems like quite a simple thing to do: make some stuff in your home country and then sell it in another country. However, the act of selling elsewhere can be more complex than it at first appears and, when there is complexity, so too will there be additional expense. The authorities controlling sales in the overseas country may require packaging to be translated into a different language and printed using a different alphabet – and quite justifiably so in many cases. Are you comfortable giving your family members food or medicine when you cannot understand the contents or the purpose of the product?

For an exporter, the easiest means of organizing things is when a potential seller contacts you and offers to take care of everything (this is known as pull-exporting). Indeed, there are plenty of times when the manufacturer has no real idea that the products are going to be sold overseas at all. For example, one of our most well-known markets here in Bangkok is the Chatuchak Weekend Market – and many of the products that are sold there, made in Thailand, end up being sold in the souks of the Middle East. I have watched merchants dealing with Chatuchak vendors and negotiating to buy large quantities of products which the merchant than arranges to have transported back to the home market.

Clearly, the party in such a deal who does most of the work can expect to get most of the profit. Successful exporting, especially for a relatively small company, involves identifying opportunities for selling products at a profit in another market while taking into account all the additional costs of transportation, repackaging, marketing and so forth. Goods which are imported are nearly always more expensive than locally-produced alternatives because of the need for all of these additional costs –and where a monopoly is achieved, this is usually only short-lived because there is such a strong inventive for local producers to come up with a rival product, one way or another.

Exporting on the whole offers producers only a limited amount of control over the conditions under which the goods are ultimately sold. This can lead to a loss of reputation if the goods are sold in a substandard condition on under false pretences of one sort or another. The desire to enforce more control over the sale processes is one of the main reasons why exporters may seek to step up their level of commitment to the overseas market and establish a sales or marketing office there.