Why exporting is outside many companies’ comfort zone
By Bill Armbruster
The results are in, and the risks have it.
37 people responded to the question in my last blog about the biggest obstacle to exporting. The results were:
4 Fear of the unknown
2 The credit crunch
5 Transportation bottlenecks
7 Red tape
12 Too risky
0 Tariff and non-tariff barriers
7 Something else
[You can see the responders’ comments here.]
The response depends in part on who you are, but in my view fear of the unknown is the biggest reason, followed by the perception of risk. Those two are closely related, and I’ll discuss them below. But from the perspective of many small and medium companies that might like to export, or to export more, the biggest obstacle might be the credit crunch. From the perspective of many shippers, the biggest obstacle is transportation – the shortage of vessel space and containers. And for others, it’s the red tape – the hassles of documentation and compliance with lots of rules and regulations. For them, it’s just not worth the trouble.
So let’s look at the fears and the risks. As one reader put it, “Americans are generally very uncomfortable with anything non-American.” I agree. Our culture, our educational system and our media are so American-centered. We just don’t know very much about the outside world, and what you don’t know, you tend to fear.
As for the risks, one reader commented that when companies analyze the risks, they decide that investing in the domestic market is a safer way to expand sales. To be sure, exporting is not for the faint of heart. There are plenty of risks — not getting paid; finding little demand in foreign markets for your product; running afoul of regulations, such as labeling and testing requirements; transportation bottlenecks; unreliable partners, agents and distributors; corruption; and intellectual property theft.
But there are plenty of opportunities, and many companies fail to consider them when they do their risk analysis. Ninety-five percent of the world’s population lives outside the U.S. At least 1 billion of them are in the middle and upper classes. That’s a huge opportunity, but too many business people, don’t know it, and are too afraid to try selling in foreign markets.
Fortunately, there are resources that can help. First and foremost, there is the U.S. Commercial Service, which has trade advisors at 108 offices around the U.S. and about 90 embassies and consulates overseas. Its Web site — http://export.gov/ — is a treasure trove of information. There is also the U.S. Export-Import Bank http://www.exim.gov/, which provides loan guarantees, credit insurance and working capital loans to U.S. exporters, and direct loans to foreign buyers of U.S. goods and services. There is also the Small Business Administration http://sba.gov/. Its services include quick and easy loans to small business exporters. So help is available.
I’ll have more to say about the obstacles to exporting, as well as other resources to help exporters, in my next blog. Meanwhile, let me know what you think.
About Bill Armbruster
Bill Armbruster, the anchor for The Datamyne Blog has covered shipping and trade for 30 years as a reporter and editor with The Journal of Commerce and Shipping Digest. “I’ll be blogging on headline news and current issues in oceangoing commerce, trying to shed some light on the backstories and, wherever I can, supply some sound advice for shippers.” Write to [email protected]
The opinions expressed in this article are those of its author and do not purport to reflect the opinions or views or Descartes Datamyne. In addition, this article is for general information purposes only and it’s not intended to provide legal advice or opinions of any kind and my not be used for professional or commercial purposes. No one should act, or refrain from acting, based solely on this article without first seeking appropriate legal or other professional advice.
Date posted: May 13, 2010