READY TO EXPORT

By: Ms. Souphaphone KHAMSENNAM

Export Consultant, LNCCI

1. Why you need to check export readiness.

     Starting to export demands considerable effort from your company, both in terms of time and money spent.

     In some cases it is necessary to conduct market research in order to choose the most profitable export market. Many companies choose to enter new markets through participation in trade fairs and trade fair participation is costly and time consuming.

     Unless you have a unique product, you will be facing world market competition when entering export markets. Your product might have to replace existing products on the market and, in order to do so; you must be able to present competitive advantages.

     You might not be able to compete in all areas of activity but after investing in your export venture, you cannot afford to lose a deal because of weakness in the company, which should have been sorted out before you started your export efforts. Basic functions in the company must work smoothly and you need to have a realistic picture of your company's performance.

     By doing this you are able to uncover both the company's stronger feature, which should be underlined, and weaker areas, which have to be strengthened before starting to export.
 

2. Checking Export readiness can be seen as a three-step process

• Check basic company functions – Decide how to strengthen functions where your company performs poorly

• Once the basic functions are optimized, check your company's ability to cope with specific export issues.

• Once you have picked your target market – check again.
   

3. Basic function

     A company is a complex affair and there are lots of issues to look into. The issues below summaries some of the key points that should be looked into:

 Production capacity

     When approaching a customer it is vital to have a clear idea of your production capacity:
          Do you have a true picture of your production capacity?
          Is production capacity stable?
          Which issues can threaten stable production?

 Quality

           Quality is another issue of major importance:
         How do you ensure that product quality is consistent?
         Do you have a quality control system?  
         Other types of quality control?

 Suppliers

     Suppliers are one important link in the production chain that could endanger your deliveries:
          Is your supply chain stable and reliable?
         Are you supplier able to deliver according to agreed specifications?
         Do you have written agreement with your suppliers regarding quality, price and delivery time?
         Do you get the best possible price from your supplier?

Delivery time

     Fast delivery time and above all guarantee in respect of delivery is gaining importance as a competitive advantage:
         What are you delivery times?
         What are you terms of delivery?
         What is your guarantee in respect of delivery?

Price

           Do you have a systematic approach to price calculation?
         Are you sure that your prices right for the market?
 

Marketing issues

     Marketing is the way you present your company and your products to the consumer

• Do you have a printed company profile, which will able new customers to get a true picture of your company?

• Do you have product brochures defining: size, measure, weight, product standards, delivery time and other relevant information?

• Do you have brochures, photos or other types of making material (e.g. website)

Customers

       The customers are of course the central issue. If you know the market and the customer's needs you are likely to have a good business:
         What are you customers?
         What market segments do you serve on your home market?
 

4. Specific export issues

      Once you have a clear picture of how your company performs and what needs to be strengthened in terms of the basic functions it is time to look at specific export issues:

Business plan

      A business plan helps to clarify the goals when starting export activity:

• The plan should define the expected output in terms of increased export sales and the input necessary to achieve the goals

• Your expected companies advantage in relation to the export market should be started in the plan

• The business plan must be put into a time frame that will allow you to monitor and adjust the plan as you go along
   

Budget

      The business plan must be followed by a budget. There will be specific expenses in relation to export activity:

     •  Marketing material might have to be translated
     •  You might need to hire new staff in order to get the necessary capacity to handle export
     •  Products might have to be modified in order to suit export markets.

Financial resources

     After drawing up the business plan and the budget you need to look at your financial resources:

• How will export development costs be benefited?

• Do you have the staff necessary or do you need to hire new staff?

Communication

      How do you export to communicate with customers on the export markets?

• Dose your company posses the necessary language skills?

• Do you have internal access, fax or phone?

Customers

      Export customers may very well belong to a different segment than on the home market:

• Who are your customers?

• What market segments do you expect to serve in export market?

• Do you possess sufficient knowledge about behavior, culture and customers in the export country?

Export marketing

     Marketing material including company profile, product description and business proposals may have to be translated.

Products

      There may be legal requirement of the importing country?

• Will you need to modify your products to suit new/different market requirements?

• Are you familiar with relevant trends, taste and preferences on the export market?

Certification

       Does the product meet the legal requirements to the importing country?

• If exporting foodstuffs (meat products) certain countries, for instance the EU, require the export country to be certified.

• Many countries have special legislation for toys and electronic devices.

Transport/shipment of products

      It is important that you are able to present the importer with the best possible means of transportation
 

5. Export Audit

      As a way of checking whether you are ready to export, we recommend that you carry out an Export Audit. The Audit covers the subjects I have mentioned.

     •  Identifying your internal organization structure, as well as product and service strengths and weakness in terms of export potential
     •  Providing your business with an overall evaluation of your export readiness with regards to resources competitiveness and expectation
     •  Identifying key area the potential exporters need to focus on before entering a foreign market
     •  Offering tips to assist in export readiness
 

6. Checking export readiness can help potential exporters:

     Checking export readiness can help potential by

• Identifying your internal organization structure, as well as product and service strengths and weakness in terms of export potential

• Providing your business with an overall evaluation of your export readiness with regards to resource competitiveness and expectation

• Identifying key area the potential exporters need to focus on before entering a foreign market

• Offering tips to assist in export readiness
   

7. How he EPD of LNCCI can help Lao SMEs in preparing to export:

     The EPD of LNCCI can help entrepreneurs in Laos by:

• Providing the information and evaluation of readiness to export

• Helping entrepreneurs to find the suitable ways for export development

• Helping companies make effective decisions based on logical, systematic thinking.