I recently needed some international trade help specifically in the area of legal advice in order to create an international distribution agreement. In there I wanted to know how to terminate the distributor. Although some countries will side with the local distributor. Their law specifies that unless there are specific clauses in the agreement “Once a distirbutor, always a distributor”. Thanks to the great help of the volunteers at the North Texas District Export Council, I understood that including performance requirements in the contract helps with that issue a lot. Otherwise, a manufacturer in the U.S. subjects himself to lawsuits in foreign countries by distributors who find themselves cut off from the vendor, but who still want to do business.
For those in charge of USA Export products and who travel to Europe there are a few tips that may help you. It is easier for the traveler to stay in a particular city, but for the neophyte international road warrior, check out some of these helpful hints. Many of the small European airlines, have 1 Euro specials. Check out www.brusselsairlines.com, www.easyjet.com, www.airberlin.com, www.jetairfly.com or www.vueling.com
For American carriers connecting onto flights in Europe, allow plenty of time for any delays. Many times a 2 hour layover is not enough. Any disconnect may cost you the price of the second flight. My favorite airport to land into is Paris Charles de Gaulle because of the TGV (High Speed Train) station that is right in Terminal 2. It allows for high speed connection to other parts of Europe or normal train service to Gare du Nord. There you can connect onto more High Speed Trains (www.tgv-europe.com/), the regional train system or the metro. Milano’s airports have the worst connections to the city or the rest of the country.
For the USA Export Manager, car rentals in Spain are much cheaper with www.pepecar.com, but you need to reserve the car at least 2 days before the start of the rental period. The inconvenience of not having their office inside the airport itself is well worth the price difference. You also need to have an International Driver’s License. This can be obtained from your local AAA office for a small fee. It is recommended that you carry this International Driver’s License with you in every country. If you do not have a GPS, use www.viamichelin.com to guide you on the road. If you will take a taxi, print out the route to give to the cabdriver, so that he won’t “tour” the city for you.
Most IBIS hotels (www.ibishotel.com) are very convenient and correctly priced for the business traveler. A small restaurant with local food offers breakfast and dinner for the USA Export Manager who leaves early or arrives late and has no time to look for a restaurant in the neighborhood.
USA export products are poised for good times! The governments all over the world want us to believe that the recession is over. The manufacturing indices of most countries have been steadily increasing this year, month after month. According to the Institute for Supply Management, the US manufacturing index is leapfrogging to 52.9% in August. That’s more than 8 percentage points better than it was in June.
Now that the lethargic summer months are gone, it’s back to work as before. Eleven of the twelve regional offices of the Fed suggested an encouraging sign: the economic activity has begun to stabilize. If the US economy really starts growing in the second half of 2009, then the longest recession in 65 years will have ended.
How about some more good news: the US Dollar is losing strength and that’s good for USA export products. Yesterday and today one USD bought Euro 0.68. Year after year, the USD stays stronger during the summer and as soon as September comes around it’s value decreases (see: http://www.xl-group.us/files/Currency_Exchange_Matrix_Table5.pdf). This means that a manufacturer who wants to expand needs to look at export markets. USA export sales may become easier than domestic sales. Because the USD is so cheap, Europeans would pay only 68% for an American product compared to a similar European product. Although, the Europeans may suffer as much as the Americans, they get a better deal buying American products when they do buy.
That is likely to get even better for exporters. The stimulus package the government promised earlier this year has caused the US Dollar Index to lose more than 10%. International investors believe that the USD is not as good an investment any more and therefore place their money in other assets. Although Timothy Geitner continues to assure domestic and foreign investors that their investments in the US are safe, he is unable to prevent them (in the case of the Asian countries) to sell off big chunks of debt they bought from the US. And that’s very good for the USA export.
Will the G8 meeting have any effect on USA Export numbers? Eight of the industrialized nations of the world are meeting in l’Aquila, Italy this week. Other nations will participate as well. Italy’s Prime Minister, Silvio Berlusconi had decided to change the venue to l’Aquila to draw attention to the need of the region. Indeed the meeting was originally planned to take place on the beautiful Italian Island of Sardenia. After a strong earthquake with many afterschocks hit l’Aquila earlier this year, it seemed like a good idea to move the venue there. But what does that have to do with USA Export numbers?
China and India hold many of the US Dollar reserves and will be in l’Aquila. Russia is a G8 member and also wants to see changes in the world’s currency systems. China has been suggesting to start working on a global currency. It too is seeing what the rest of the world is seeing. The huge amount of new money that went into circulation for the American stimulus adds to an already weak US Dollar. All the countries with heavy investments in US Dollars have a double edged sword:
- Their Treasury Departments cannot afford for the Dollar to weaken much more.
- Nevertheless, any slump in the US Dollar makes it less competitive to export their products into the US.
However, American manufacturers would have it easier to export their wares overseas.
China will be attending the G8 meeting this week. It has a great interest into finding ways to start moving away from the Dollar, while at the same time trying to keep its value. A big decline in its value would have catastrophic consequences on these emerging markets where the global recession has also hit hard. For the past 45 days one Dollar has been worth about 0.70 Euros. It has been sliding from a year high in February at 0.79 Euros. US Manufacturers would not mind to see an exchange rate of 0.64 Euros as it was a year ago so that they can increase their USA Export numbers. But, what about the rest of the world?
What do USA Export products have to do with the manufacturing index? Good news. It’s true, it is good news, well … for June 2009 and May 2009 compared to April 2009. According to the Institute for Supply Management, the US manufacturing index increased to 44.5 in June from 42.8 in May and 40.1 in April. That means that the manufacturers across the country are seeing more orders and are therefore making more stuff to fill in these orders. In December 2008, that same index was 32.4. Any number under 50 signifies a contracting economy. It is now actually much better than experts had forecast. So, for the past 6 months, more products are being made and shipped out in order to satisfy the needs of the consumers. We are slowly getting better and overseas activities are showing the same thing. The June number for factory orders will be indicated by the Department of Commerce tomorrow, and here again it is expected to see a slight improvement.
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USA Export to Turkey? Should a US manufacturer consider exporting its products to that part of the world?.
This country has come to the forefront of the news thanks to its politics and its geographical location. Turkey has been a republic based on the political systems of European countries for some time. Its population of 77 million has followed their creator Ataturk’s model of keeping church and state separate. The result is a bustling activity with a yearning to be better recognized in the West as a country with growing importance.
Istanbul is expanding on either side of the Bosphorus. With the largest part of the city on the European continent and the other on the Asian side, it has been leading Turkey to open up more and more to the West. Western business practices are attracting investments and Turkish policies and exporting efforts are taking the country to the rest of the world. According to the CIA’s World Factbook 30% of its employment is in agriculture. It’s largest trading partner is Germany from whom it imports almost as much as it exports. Turkey imports twice as much from Russia than from the US. And this presents a great opportunity for USA Export products to be sold into Turkey.
Although we see enormous growth in Dubai, Turkey is well positioned to between the Western and the Eastern business cultures. The commercial attitude of the Turks is well known and the growth of the American Business Forum in Turkey is proof that business leaders are committed towards stronger relations with the US and throughout the world. Those business people also understand the importance of that country in the world’s economy. Surrounding countries like Azerbaijan and Kazakhstan look toward a strong Turkey for business relationships and guidance. It’s GDP’s annual growth between 2002 and 2007 is 7% to reach $660 billion, making it the 17th largest economy in the world. And they are open to USA Export products.
The USA Export number for April was at a 35 month low. The Imports number for April dropped also, however, slightly. The reports from the Census Bureau show a larger deficit when combining both the imports and the exports. Oil is a big part of why it is now wider. There are 2 reasons:
1) The US imported almost 3 million barrels more oil than in March.
2) The cost of oil went up from $41.36/barrel in March to 46.60/barrel in April.
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Unless you already have USA Export customers or have giant companies purchasing your products, your typical terms of payment will be Net 30 days or shorter. Most companies operate with money borrowed from the bank in the form of loans or lines of credit. Any day that a payment comes in after the 30 days, it costs real money and slices into the bottom line. Once international customers are being approached, there are other issues to consider before pricing is even brought up:
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There is a lack of demand for our USA export products!
That was the headline of an article in the Dallas Morning News. It is true that the trade deficit has been getting smaller since the peak in July 2008. That is the result of the decreasing amount of exports and an even more decreasing amount of imports. The global recession has placed a great pressure on sales everywhere. However, according to the CIA world factbook, the US ranks No. 41 in the world for exports per capita. We are right after Gabon at $4482! Some European countries are exporting more than they produce for their own consumption.
It is a fact that US manufacturers have been very busy taking care of their own backyard. And they have taken extremely good care of their backyard. The US has the largest economy in the world. Nevertheless, they have gained little experience looking outside of the US borders and especially outside of North America for USA export products. It is the result of not having offered their products to foreign buyers in a concerted effort. The world economy has been global for several years. Do all US manufacturers understand that in order to survive, exporting is an absolute necessity? Continue Reading »
“A weak dollar makes USA export products more attractive to buyers in foreign countries, which helps U.S. companies sell more stuff.” comes from the article “What’s behind the dollar’s gyrations? – U.S. Money was strongest when economic crisis was worsening, the seesawing dollar from the Associated press published amongst others by the Dallas Morning News on June 2. In short, the reason for the dollar recent weakness (see http://www.xl-group.us/files/Currency_Exchange_Matrix_Table5.pdf ) is the increased amount of debt the United States has amassed in recent months.
The weakness of the Dollar helped the US getting out of the great depression of the 1930’s and so the similarity may be strong between both recessions. USA export products helped American companies grow and put more people to work.
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