Tip sheet: Before you expand to a foreign market

March 23, 2012

Exporting can be a great way for small businesses to grow their operations, but before jumping into a foreign market, experts say there are a few things to consider.

Research

A thorough review of a foreign market’s business climate and customs should be the first step in going international, said April Redmon, a trade specialist at the Northern Virginia U.S. Export Assistance Center. She recommends checking out Web sites such as Export.gov for information on regulations and compliance. Once that research is completed, developing a marketing plan is key.

Partnerships

Redmon encourages companies to reach out to embassies to help identify and vet distributors. A majority of embassies also have commerce bureaus to establish trading partnerships with U.S. companies interested in exporting or importing.

Contracts

Attorney Enrique Gomez-Pinzon of Holland & Knight recommends companies draft contracts that include an international arbitration clause. That way, if anything goes wrong down the road, they can take their grievances to an impartial third party.

Gomez-Pinzon said companies should understand the difference between a distribution and an agency agreement. In Latin America, for instance, “agents” have stronger protections from being terminated without cause, while “distributors” do not.

Currency

The attorney advises businesses to have a comprehensive understanding of the nuances of foreign currencies, especially the right to repatriate profits. Some countries, he said, require foreign companies to hold investments for a period of time before selling.

— Danielle Douglas

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