In foreign trade, there are three phases that determine the consolidation of the business project in the destination market. The first is commercial sales operations abroad. For this, a commercial intermediary is enough to collect the goods at the port and market them. The second is cooperation with a local partner who takes care of the entire process. Randall Castillo Ortega, an expert in global trade, offers insight into how import and export companies can create strong foundations for the organizations.

Although there are some exceptions, whether they are emerging markets or developing countries, it is recommended to start the foreign adventure with a local partner. The work of a local partner will pave the way for you and avoid problems. With a distributor or commercial agent, you save the logistics structure, offices, personnel, and transportation. Always remember that costing is a priority.

The correct choice of a partner or supplier is a key factor in the process you have started. Fairs are an excellent showcase to get in touch with them, but be wary of those who want to close an agreement on the spot. Before initiating anything, look for information about that potential partner or supplier. The size of the company, production, talk to companies that have worked with it, its financial solvency (in the case of a partner), and compliance with delivery deadlines (supplier).

States Castillo, “Once the decision has been made, it is essential that a relationship of trust and knowledge is created, both mutual and of the product or service offered and the market. For the association to strengthen the company, making it more competitive, it is key that the chosen partner has a good network of contacts and the ability to expand it, as well as financial stability.”

The choice depends on the country, volume, and trust with the customer. For occasional and small orders, a bank transfer or payment order is better; it can be simple or documentary, depending on whether or not the beneficiary requires the presentation of any proof. The expenses arising from bank fees are borne by each party. If you have full confidence in your client, do not hesitate, the international bank check is the simplest, cheapest, and safest means of collection.

Other more complex means used in operations to a certain extent are remittance and documentary credit. The remittance can be simple or documentary. First, if you are the exporter, you will deliver the letter or promissory note to your customer's bank so that he can proceed to manage its collection within the agreed period. The second allows you to maintain documentary control of the merchandise since the bank will not deliver the commercial documentation to the customer until the importer accepts the letter.

There are two ways to protect your invention. The PCT system or international application, with which, through a single document, you request protection of your invention in a total of 128 countries. The other way is the application for the European patent, in which you designate those States in which you want the protection of your invention. The application for the European patent is processed by the European Office, but it can be submitted to the Spanish Patent and Trademark Office. You can submit it in any of the official languages of the EU.

In import and export operations, it is essential to understand how the international logistics and transport aspects work. It is the highest investment. There are three ways to send your merchandise to the destination market: road, boat, and air transport. Each medium has associated costs that make it unique and perfect, depending on what type of shipment.

In a commercial offer to an international customer, you cannot miss the description of the product, quantity, conditions of shipment, delivery, payment, price, and currency. Of all of them, the price is especially relevant since it will determine the competitiveness of your product in the chosen market. How to calculate it? Take note. To the final sale price at the destination (you can find out by visiting stores in the country or on B2B portals), you have to add the distribution margins (importer, distributor, retailer), transport and insurance costs, customs duties, and customs expenses (it will include export clearance and import clearance, duties and any other taxes or fees that tax the entry of import products) and financial expenses.

The decision to go abroad using the Internet as a sales channel is more than advisable in these times. You save costs and eliminate intermediaries. Of course. To transform your website into an export channel, the first thing is to review its structure. Make sure that it can support peak sales dates (ask your supplier to do a simulation of that assumption), that the platform is multi-language and multi-currency (you choose which one or which ones according to the target market or markets), and that it has a payment gateway (the equivalent to the POS of any store), is optimized for search engine and allows for complete management of orders and customers.

As long as you have achieved a good knowledge of the destination market and want to grow in it by sharing the investment with a local partner. Opting for a joint venture or joint ventures is always cheaper than setting up your own subsidiary. The European Commission defines a joint venture as “a company subject to the joint control of two or more companies that are economically independent of each other.

Are you a consolidated, flexible, specialized company with production capacity? If so, you fit the profile of the companies that win international tenders and competitions. ”It's not an easy task,“ adds Castillo. ”Wanting to join this select club implies an active search for project information and business opportunities."

One of the questions you should ask yourself in import and export operations is whether or not you assume the risk of currency exchange. To help with this monetary uncertainty, you have the contract of foreign exchange insurance. This is a more than recommended option in volume operations.

Lastly, do not forget that the maximum legal term to carry out the coverage is one year, that the quotes of foreign exchange insurance are approximately equivalent to the difference in interest on the currencies, and that you can take out foreign exchange insurance at any time prior to the expiration of the collection/payment.

About Randall Castillo Ortega

Randall Castillo Ortega has been involved in the financial space virtually his entire professional career. In addition to having founded the financial lending firm RACO, he is also an avid outdoorsman and, along with his family, is a huge community supporter. He regularly participates in community ceremonies and events organized to drive a better environment for children and families.

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