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International Trade Basics

International Shipping

Trade between cultures and countries has existed for millennia. Recent advances in technology now make international trade easier and more accessible, even for small business owners.

According to the U.S. Census Bureau, the top 10 nations with which America trades (in order of largest import and export dollars to smallest) are:

  • Canada
  • Mexico
  • China
  • Japan
  • Germany
  • South Korea
  • Vietnam
  • Taiwan
  • India
  • United Kingdom

Managing Trade Challenges

While the Internet has forged new pathways in international trade, challenges for small business owners continue to exist. Fortunately, technology makes some of these easier to manage.

  • Language. Your website may be formatted in English, but not everyone speaks the language. Consider offering online translation options, and publish marketing materials, instructions and warranties in the language spoken by your primary foreign market.
  • Payment. Although you can require that all payments utilize U.S. dollars, you’ll probably be dealing with different currencies. For this reason, it’s important to know current exchange rates. A daily update is posted on the IRS website (opens in a new tab), and several sites will calculate exchange rates for you. Consider using a service that offers global payment options such as PayPal (opens in a new tab).
  • Shipping. Not all carriers ship everywhere, and some have weight and size limitations. Attractive rates are available to some areas but not to others. Research will help you find the best options.

Cultural Clashes

Another big difference between doing business domestically and internationally lies in cultural diversity. Research suggests that some American companies fail because their owners and employees don’t adapt their behaviors to accommodate these distinctions. The following guidelines will help you avoid embarrassing gaffes when conducting international business.

  • Build a relationship before you get down to business. Getting to know your customer or vendor first can facilitate commercial transactions later.
  • Don’t impose time limits. Americans are inclined to watch the clock, but other cultures may treat time more casually. Keep the schedule loose and flexible to reinforce your negotiating position.
  • Study your market. Learn at least a few facts about your trade partner’s country, and memorize some basic words and phrases. This demonstrates respect for your colleague’s cultural heritage.
  • Get acquainted with the national etiquette. Some nations frown upon hand-shaking, hugs and other American customs, as well as too much informality in business settings. Play it safe and exercise restraint.
  • Bring your own interpreter. A translator you hire will more likely work for your best interests.
  • Dress professionally. If your colleague’s country is restrictive for religious reasons – requiring head coverings on women, for instance – you should know what is expected – or accepted – from foreign visitors.

Getting Started

Expanding your business to global markets can be rewarding, profitable and challenging. What’s more, venturing into the international arena can protect you – in part – against the decline in domestic markets, as well as significantly improve your overall growth potential. Most international business development experts suggest starting the process systematically:

  • Prepare an international business plan to evaluate your needs and set your goals. This will assess your readiness and commitment to grow globally.
  • Identify international markets. The Department of Commerce (opens in a new tab) provides information on foreign markets for U.S. goods and services.
  • Evaluate and select methods for product distribution. These range from opening company-owned foreign subsidiaries to working with agents, representatives and distributors, and setting up joint ventures.
  • Learn how to set prices, negotiate deals and navigate the legal landscape of exporting. Cultural, social, legal and economic differences make exporting a challenge for business owners who have only operated in the U.S.
  • Assess the best way to collect payment. Fortunately, the government’s interest in boosting exports, coupled with centuries of financial innovation, has expedited fiscal processes.

Before shipping, make sure you package and label products in compliance with your target market’s regulations. While the globalization of transportation systems helps, regulations still differ from region to region.

Have questions about international trade? We can help.