How to Avoid 8 Common Mistakes First-Time Exporters Make

Entering new markets can be challenging for a company at any stage of its growth, but the return on investment for success is enormous. Leaving the EU without a deal becomes more likely by the day, and the economic picture for the UK, according to some analysts, is becoming more terrible by the day.

Trade with the EU, which accounts for around half of UK exports, might be significantly damaged if no deal is reached, according to reports. Therefore, if the UK economy is weak and EU commerce is likely to become much more difficult, what can companies do to encourage growth?

Companies in Britain would be wise to explore opportunities in Asia, which has the potential to become a rapidly expanding market for British exports. Today’s key markets in Asia offer tremendous opportunities for British firms.

There has never been a better time to consider exporting to the region, as demand for British goods continues to rise and shipping becomes more streamlined. However, before you get in, make sure you do your research and steer clear of these risks.

Where do you stand in terms of familiarity with your ideal customer?

Many businesses that sell internationally mistakenly expect their products would be accepted everywhere. Not so. Extensive investigation is required. If you are exporting to a foreign country, you should be aware that market conditions there may differ significantly from those in your home country.

Lack of knowledge of the target market, consumer behavior, and improper segmentation of the market lead to the failure of many otherwise strong product portfolios when exported. In the case of the Chinese market, the luxury segment of a phone case company’s offering is less likely to be successful than the more affordable segment. High-net-worth consumers will not consider purchasing a premium product from a new entry brand that offers both luxury and affordable products.

Even though the Chinese upper-middle class has the money to afford the luxury goods, they are not likely to do so because it is looked upon in Chinese culture to display wealth or possessions that are superior to those of one’s superior or employer. When planning an export strategy, it is essential to take the target market’s culture into careful consideration.

Customs tax rates

Many first-time exporters make the error of bundling together products of different brands under the assumption that they all fall under the same customs categorization. However, every nation has its unique system, and while at first glance they can appear to be similar, there are significant differences once you dig deeper.

Depending on the commodities in question, a country’s import tax limit may be lowered, and its classification policies may be more flexible. A different country might like for us to break down each product into its component pieces before calculating the total tax.

When exporting for the first time to a foreign country, it’s important to familiarize oneself with the local customs tax rules and to seek advice from experts in the field. The difference between making a profit and losing money on your export plans might be as small as a few percentage points, so you must get the tax calculations correct from the beginning of your project.

Don’t assume anything based on a country, not even a close neighbor. Remember that the customs regulations and interests of your intended country are crucial factors to consider when estimating your prospective customs liabilities.

What’s the deal with CIF versus FOB?

International shipping agreements include Cost, Insurance, and Freight (CIF) and Free on Board (FOB). Specific definitions may vary by region, but in fact, both contracts establish the scope of each party’s legal responsibility to the other.

You should adjust your export pricing based on whether the goods are being shipped CIF or FOB. Under a CIF arrangement, the seller is responsible for getting the goods to the port, loading them onto a ship, and covering the cost of insurance and shipping.

Since you are responsible for all transportation costs up until the point of delivery, you can charge more when exporting under a CIF arrangement. In contrast, once the items have been shipped, the seller is no longer responsible under FOB contracts. Once the travel has begun, the responsibility for any damages has passed to the customer.

Make sure you understand the dangers and advantages of both types of agreement while negotiating your business and their future implications on your profit margins.

Which is better, the air or the sea?

Don’t assume that delivering your freight via air is always going to be the more costly option. If your goods have low weight but greater value, or you need them to be there soon, air freight is the most cost-effective alternative.

Take into account waste when making plans

This is something that might be tricky to do correctly until you have some experience shipping your items to a specific location. The rate of damage to shipped items can vary depending on many factors, including the logistics company used and the route taken to deliver the goods to their final destination. If the number of undamaged items provided doesn’t match the original contract, then this can lead to payment being delayed or the added expenses of shipping replacements.

Avoid breaking the law by ignoring the packing regulations

When shipping goods overseas, careful attention must be paid to the packaging. Depending on local requirements, packaging for each of your target markets may need to be highly different. You should make sure you know the labeling and material requirements of your export market.

Keep safe

Get trademark protection for your product and all of your branding materials, including your logo, tagline, and other promotional materials.

Please read all paperwork carefully

A Certificate of Origin and other documentation required for various customs and market laws should be included in every export, thus it is helpful to keep track of these items on a document checklist.

But don’t make the mistake of believing this is a process you just need to do once. Remember to keep up with the latest documentation standards in the country you are shipping to, as regulations are subject to frequent change.

Conclusion

It might be difficult to get a company started on the path to globalization. Many businesses have started up attempts to expand into overseas markets, but not all of them know what they’re doing. Get the most out of your expertise in International Trade by working with any DGFT Consultants. This may open up some fresh possibilities for your company and you will also get an idea of the EPCG license and other schemes that are very essential for your export business.