Relatively speaking, Zimbabwe is a fairly small country with very modest population size and an ailing economy to boot. This means that it usually doesn’t take long for ambitious companies and business people to outgrow the Zimbabwean markets and have to start looking for new opportunities elsewhere. Besides the somewhat limited economic prospects within the country’s borders, the present environment also forces companies and individuals to look for their foreign currency to fund the importation of crucial resources like machinery, spares and raw materials. That is the reason why expanding to foreign markets has become such an important consideration for businesses of all sizes. Here we explore how businesses can go about this.
Option 1: Selling directly to the final consumer (e-commerce)
If you are a producer of consumer goods and are operating on a limited budget, you can try to break into foreign markets through e-commerce. E-commerce is already mainstream in other parts of the world so you can take advantage of this and cut out most of the middlemen that would normally be involved in the conventional export of your products. You can either build your e-commerce store or use any of the popular existing eCommerce platforms. You will also need to integrate your store with an online payments gateway provider which allows you to accept foreign currency payments.
You must however not think that this is the easiest route to foreign markets. E-commerce is nowadays highly competitive and a notoriously difficult nut to crack. Most of the expenses which e-commerce appears to do away with usually come back to haunt you in the form of advertising fees, customer support etc. Delivery companies like DHL and FedEx usually offer a lot of handholding when it comes to moving small packages and parcels across borders, so getting your customers’ orders to them shouldn’t be as much of an involved process as shipping an entire container.
Option 2: Become an exporter
Choosing an export market
The world is a very big place so one of the first questions you should ask yourself when you decide to become an exporter is exactly which country you are going to be exporting to. Yes, eventually you can export to as many countries as you want but you have to start succeeding somewhere. This initial export market can be a neighbouring country in our Regional Economic Community (SADC/COMESA) or an overseas one. Such a country should be chosen through comprehensive market research which takes into consideration factors like trade policies, business environment, culture, potential competition, regulations, political climate etc.
Entering the market
After having picked a country to export to you then have to choose a market entry strategy. You can, for instance, choose between exporting directly and indirectly to the final consumer. In the former, you sell directly to a retailer (if yours is a complete product) or a manufacturer/processor (if you are exporting a raw material). Indirect exporting involves selling to middlemen in the target country. These include wholesalers, distributors and other parties who handle the distribution of the product in the final market.
Exporting is still business so you almost always have to market your products before you can get buyers. You can start by participating in foreign trade fairs. Trade fairs are some of the most important meeting points between buyers and sellers. Your company website is also another way for potential foreign clients to discover your company and its products. Sometimes getting customers may involve a lot of in-person pitches so you can organise meetings and bring your brochures, posters, press kits and annual reports.
Zimbabwe is landlocked, this means that most of our overseas cargo either has to be airlifted or shipped through a country with a port like Mozambique or South Africa. Your cargo therefore usually has to do a lot of countries hopping and change modes of transportation before it gets to its destination. A lot of third-party service providers usually have to be involved (and paid) to facilitate all of this. These service providers include freight forwarders, customs brokers and cargo agents. Exporters must also educate themselves on the principles of both sea and air travel.
There are certain documents which are required in international trade and they usually differ from those used in domestic trade. The first of these is a detailed contract between the exporter (you) and the importer (your customer on the other side). Among other things, the contract must state how disputes will be handled—remember that you and your customer are in different jurisdictions.
To avoid misunderstandings across cultures and language barriers, there exists a set of universally accepted International Commerce Terms (INCOTERMS) which govern international trade. Exporters and importers should familiarize themselves with these.
To facilitate the efficient customs clearance of goods, products are classified according to their descriptions into customs tariff numbers. These are called the Harmonized System or (more commonly) H.S Codes.
Other important documents in international trade are the commercial invoice, the bill of lading, the certificate of origin, the letter of credit, the insurance certificate and a phytosanitary certificate which certifies that any fresh plants and vegetables are free from pests.
Exporters usually wish to be paid as soon as possible for their goods while importers usually hope for as much leeway as possible. The amount of competition and the negotiating power of each party is usually the deciding factor. The two most common payment terms in international trade are Cash-in-Advance and Selling-on-open account. In the former, the importer sends all or part of the payment before they receive the goods while in the latter it is the exporter who ships goods on the promise that payment will be received at a later date.
This is but an overview of the export process and its many procedures and requirements. To get additional information on any of the abovementioned points you can contact ZimTrade or visit their website at http://www.tradezimbabwe.com.