• Knowledge of the International Marketing Environment
  The first step for exporting is to gain general knowledge of the international marketing environment. You should spend time learning and understanding the potential market’s economic environment, as well its culture and ways of doing business. These aspects weigh heavily on business strategies and ought to be considered carefully.
  
• The Export Decision
  A company must determine if exporting is compatible with its short and long term objectives, as well as its current business situation. Some questions in this regard include: What resources (financial, human, informational) do we have available to engage in sustained foreign trade? What are the strengths and weaknesses of my company and its products (especially with respect to my target market and potential competition?) Can my company supply products to other countries without affecting the quality of the products and the services provided in my local market?
  
• Finding Target Markets
  Market research of the countries where you are planning to export, as well as their economic and political systems, their culture, and the way they do business, can provide valuable insights for evaluating the potential success of your product. Research must take into consideration the following factors: geography (including distance from manufacturing origin, and transportation facilities), culture, income levels, market competition, and political environment, among others. You can obtain this data by interviewing potential clients or sales representatives in the country, as well as official and public sources on foreign business.
  
• Finding Potential Customers
  Once you have identified countries or markets for exporting, it is necessary to find potential customers, intermediaries, or representatives who could be interested in buying and selling your products. There are many ways to look for customers, and Puerto Rico Trade can help in this task.
  
  Searching Methods:
  • Business trips
  • Trade Missions
  • Trade fairs and exhibitions
  • Internet (including directories, organizations, business registries, and the like.
    
• Approaches to Exporting
  There are two ways to export a product: directly or indirectly. The export approach selected by the company must be made according to the level of control desired. For example, in exporting directly the company assumes all responsibilities for the process: from initial sales to assuring that the customer receives the product in a satisfactory condition and payment is remitted. Meanwhile, indirect exporting requires intermediaries and, to a certain extent, lesser control of the process Exporting directly increases the earnings potential for the company but also includes additional risk. On the other hand, exporting indirectly usually signifies reduced earnings but also exposes the company to less risk.
  
• Logistics
  When preparing to export, you will have to consider all the logistics of transporting your products from your company to its final destination. Analyzing this process can help provide you with the most cost-efficient option for your company. You must discuss with the buyer all details regarding product handling, as well as payment. In order to assure transparency, a set of international trade terms (Incoterms) have been developed, that assign responsibility and delivery terms for all parties involved.

In order to check the specific requirements and restrictions you must heva the product’s official classification. Internationally, products are classified with a number which helps Customs identify products and impose tariff and restrictions. This number is found in the Harmonized System Code. Other important classifications, such as NAICS, can help you obtain statistics.

To obtain the classification of a specific product you may consult customs or visit the web site:
www.usitc.gov/tata/htsbychapter/2005_supp.htm.

In some cases a license is needed. This must be verified with the U.S. Bureau of Industry and Security.

• Pricing
  Determining the price at which the product(s) will be sold abroad is one of the most important tasks that must be undertaken in order to maximize profits for the company. To do this you must consider both internal and external factors.
  
  Methods for determining the price:
  • “based on cost.” In addition to the cost of the product, accumulated increases that intermediaries will charge, as well as any additional incurred costs until you arrive at the final price which the consumer will pay.
  • “based on price.” Take the market price at which the product is sold in the target market, and subtract intermediaries’ margins, as well as any additional costs incurred.
    
• Required Documents
  There are several documents that you will need during the export process. Some must be completed by the exporter, some you will receive from the importer, and others you will have to request from other organizations. Documents required from the exporter can be completed in-house or may become an additional service requested from broker companies.
  
• Negotiation
  When negotiating with a potential buyer, keep in mind several factors which are key elements of the transaction. These include general knowledge of the legal system of Puerto Rico, as well as the legal system of the country targeted for export, the merchandise transfer point, available dispute resolution procedures, etc. It is extremely important that all of this information, whenever possible, is drawn out in a binding written agreement in order to avoid problems with the importer.
  
• Export Plan
  Once you have made the decision to export, researched the local market, structured export logistics, and decided what needs to be modified, it is time to formalize the strategy and action plan for exporting. Whether formal or informal, this plan is an essential tool for thoroughly evaluating all relevant aspects of the export process.
  
• Financing and Incentives
  Your business will likely need an infusion of capital in order to export. You should research financing options available for meeting your company’s requirements. There are several options available for financing your export activity, including private and public institutions which can provide loans and guarantees for financing your operations. At the moment there are two laws which provide tax incentives directly related to export activity. These incentives are handled by the Puerto Rico Industrial Development Company (PRIDCO).

Export Incentives:
1. Tax Incentive Act of 1998 – provides special deductions and a tax rate of 7% or lower for export activities.
2. Law 169 of 2001 – concedes a 10% tax credit to companies that purchase products manufactured in PR for exporting purposes.
3. “Promueve lo nuestro” (Promote our Products) – provides reimbursement of 50% of up to $50,000 of marketing expenses for promoting your products abroad

www.census.gov/foreigntrade/www/index.html

www.bis.doc.go

www.wcoomd.org

www.wipo.int

www.uspto.gov