Statistically, 80% of the world’s purchasing power, 92% of its economic growth and 95% of its consumers reside outside of the United States. By 2050, the world’s population is on track to exceed 9 billion people, a vast majority of whom are middle-class. Thanks to the internet, a U.S. company that has never exported before may suddenly find themselves with a foreign buyer. Even seasoned exporters are at times caught off-guard by a sales inquiry from a country they’ve not marketed to.
Could this be an opportunity warranting further investigation?
Exporting may not be a top priority for many startups, but international demand can present opportunities. The ability to have globally diversified markets allows you to quickly pivot in times of domestic downturns, it enhances innovation and can even contribute to the faster growth of your company.
So, how do you know that you are an Accidental Exporter?
Did you receive an inquiry from a foreign customer? Were you asked by your domestic customer to ship to a foreign destination? Export transactions can take many forms. In fulfilling international orders, you’re asked to accommodate an array of logistical scenarios, varying terms of sale and unique customer preferences about delivery of your goods. These variables can quickly complicate your obligations under U.S. export control laws and regulations. For example, one complication is to identify and assign the correct export compliance responsibilities in transactions like these:
- A customer places an order for delivery to their Miami-based forwarder; you have no further insight into where the merchandise will go after it is delivered in Miami.
- A customer in Japan orders electronic components, but asks you to deliver them to, and invoice its U.S. subsidiary.
- A customer from Ohio orders items for shipment to India and informs you that their forwarder will collect the items from your warehouse, but also asks you to substitute their commercial documents for yours.
- A customer orders items for shipment to Guatemala and insists that you use their forwarder.
My best advice is to determine each party’s role in the transaction starting with the terms of sale – Incoterms. Remember there will likely be two sets of these terms: one for the domestic sale and another for the international sale between your customer and their foreign customer.
Proceed with caution. Trust, but verify. There are a host of U.S. Export Regulations that you should consider to, at the very least, make sure the inquiry is legitimate. Does the prospective buyer match the profile of your domestic buyer? Have you screened the prospective buyer against a denied parties list?
Wisconsin’s vast ecosystem of support organizations can assist you with this task.
I would be remiss if I suggested to you that you should go headlong into exporting without first creating a plan: a plan that focuses on researching your potential market. You want to ensure that you’ve covered issues such as brand consistency, hidden costs and paperwork, pricing, time zones and other barriers that can cause unforeseen and difficult situations.
Fortunately, Wisconsin’s SBDC Go Global Initiative is here to assist you with your accidental export.
