International Trade Agreements can be of great benefit to the exporter. The purposes of bilateral or multilateral trade agreements is to free trade among the signatories to these agreements. You should explore the benefits available for the product/s you intend to export. Multilateral trading systems is regulated by the World Trade Organisation (WTO). Visit the WTO web site on www.wto.org.com. In recent years South Africa has signed a number of bilaterial trade agreements such as the EU-SA trade agreement which has benefited South African exporters, exporting to the European Union. The South African Development Community or SADC is a regional trade agreement of which South Africa is signatory to. Here too South African exporters stand to benefit from this agreement.
The South African Government, through the Department of Trade, Industry and competition, the Department of Finance and other government agencies, have put policies into place to assist the development of exporters, to assist entrepreneurial activities and to assist the development of particular manufacturing sectors. This assistance is in the form of:
Information support services
The establishment of Export Councils these include:
International registration funding: The funding providing for patents, trade marks, copyrights registrations. Contact the dtic, and establish the types of assistance and the conditions for eligibility.
There are other types of assistance offered by public and private institutions, see listing under Support Sources of Tshwane Trade Points Pretoria
One of the greatest mistakes made by companies entering the export arena, is failing to divide up or segment the market they wish to enter. It is of the utmost importance that a well defined plan of the intended market including the customers to be targeted, must recorded.
One important aspect when outlining your market is to distinguish between buyers and the end users of your product/s. In some instances the buyer could also be the end user, but the buyer may be also purchase on behalf of the end users for example: a Distributor.
The market/s chosen needs to be segmented into specific groups of buyers/consumers and potential buyers in the said market. A segment is a group of buyers who are similar to one another (and yet different from the rest of the market) example: Professionals aged between 25 - 30 years. These segments should be divided into the needs and wants of these buyers. The segment is only worth pursuing when you can meet these needs and wants better than your competition could. By finding a segment in which there is little or no competition, you are more likely to have more chance of success.
Distribution - sole agent, non-exclusive agent, after sales service and warrantees
Explicit Features -the needs and wants that my product/s satisfies.
Having examined your product in terms of the above criteria, judging the quality and quantity of the product/s features, you will be able to better position your product in the intended market. Each of these features can be used to increase your negotiating powers with your buyers.
Foreign markets differ in various ways to that of your domestic market to the extent that that market may not readily accept your product. Factors that may effect how your product is marketed include:
Technical standards - also see Technical barriers to trade -Question 13 section: My Company
Climatic considerations - North vs. Southern Hemisphere conditions
Bilateral and multilateral agreements
If your product is different, buyers could request that you change your product to suit the needs of that particular market. Success in exporting is highly dependent on your ability to meet the needs of potential buyer/s..
Delivery is the final stage of distribution related tasks. Exporters can improve their competitive edge by supplying faster and more reliably to the end user. Therefore, the way you plan to deliver your product/s is of the utmost importance.
The entire distribution chain should be carefully documented, showing the routing of the product/s from factory to end user. This should include: local transporters, main carriers, inland transporters in the country of import, distributors, wholesales, retailers, or a combination of the above mentioned..
The image of a product is an indication of how the product, you the producer and the origin is perceived by the buyers. Sometimes the origin of the product is a positive one, but sometimes it may work against you. For example: Kenyan coffee, Brazilian leather products and South African wines, can be considered as favourable origin images. You must identify the weaknesses that relate to the country of origin, your company and or product and plan to highlight the strengths..
When designing your export strategy, pricing decisions are often a matter of affordable or expensive. At this level, you should establish whether you are a low cost or a high end supplier.
A high price needs to be justified on the basis of other features the product has to offer. Features of the product such as its distribution and delivery, its image (brand) and the image of your company, and the service which you will deliver through the product which will justify the high price charged.
Once you have decided on your pricing strategy, in calculating your prices you must take the following elements into consideration such as direct, in-direct and market elements
Direct and indirect costs of product
Competitive product features and overall quality
Current profit levels
Product life cycle
Recent price history and trends in the domestic market
Mark-ups in the target market
Tariffs and taxes
Your competitor's pricing policy
Inflation and possible currency fluctuations
"Anti-dumping", legislation in the country of importation
Demand for your product in the target market
Your projected market share
Feasibility of the price in the target market
Competition/substitutes in the target market
Customer attitudes toward the price of the product in the target market
Growth expectation in the target market
What do your results reveal?
Total up your score for each of the Parts < Multiply the score by the weighting element. For every “YES” answer give yourself 1 point For every “NO” answer give yourself 0 points.
Part A: Business Readiness Part B: Product & production Part C: Market and marketing Part D: Export development
TOTAL MAXIMUM SCORE: 178
A good beginning, but you still have a lot of work to do
You are almost there, you need to fine-tune your plans
You are ready to export
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