Tapping Foreign Markets

Here's what CPA should know to help their employers or clients expand their businesses abroad. In today's business environment, any company that overlooks foreign markets is risking obsolescence. Markets abroad can be lucrative for many U.S. companies--whether they sell products or services. Yet many managers, particularly those in smaller companies, fail to explore international opportunities because they don't know how to get started. CPAs--whether as employees or as advisers to a U.S. client--can fill that gap, helping to increase an enterprise's sales and profits. Finding customers overseas is not difficult and there are many resources available that can help companies new to exporting. This article tells how to start. BUY AMERICAN Companies new to exporting should take a narrow approach to defining the foreign markets with the best potential for their products or services. Usually, the most lucrative for U.S. companies are those in Western Europe since, collectively, they make up the second-largest economy in the world and their market cultures--tastes, values and buying habits--are comparable to ours. The huge Pacific Rim market presents a larger challenge because, unlike Western Europe's, Asia's market cultures are more diverse. Because Western Europe is an easier target, new exporters probably should begin in this market. Within Western Europe, a potential exporter should refine its target market further to a particular country or region. Because of the removal of trade barriers in the European Union, it may make sense to define a target market by its language rather than its borders. For example, a market defined as the French-speaking peoples of Western Europe includes France, Luxembourg and parts of Belgium, the Netherlands, Switzerland and Italy. OVERCOMING BARRIERS A product to be exported should be evaluated against market criteria that may differ from the domestic criteria. Cultural differences certainly affect a product's marketability in a foreign country. For example, in France corn commonly is viewed as an animal feed and not fit for humans. Thus, marketing corn products could be difficult there. Some industries and products enjoy a protected status in certain countries, making outside competition difficult. Such barriers include import licensing requirements, high tariffs or import quotas Japan's barriers to U.S. electronic products, cars and rice are high-profile examples of such problems. High transportation costs could be another barrier. Moreover, the availability of transportation might make it difficult to meet delivery deadlines. Restrictions on exporting certain products from the United States also could create barriers. Some products, like firearms, may require an export license. Lists of products that require such licenses can be obtained from the U.S. Department of Commerce and other federal agencies. Information about the import restrictions of a particular country usually can be obtained from the U.S. embassy or consulates in that country. For details on how to contact those offices, call the U.S. Department of Commerce; for the phone number of the nearest regional office, check your local telephone directory. While a nation's economic development certainly affects demand for nonessential products, big-ticket items still may have a large potential in an underdeveloped nation if its upper class is large enough. Product modifications may be necessary to adapt a U.S. product to a foreign market. A product may require conversion to metric sizes or different voltage capabilities. On the other hand, many products require little or no modification, except perhaps the translation of packaging text and instructions. TAPPING THE DATA One important source of information that can help resolve such issues is a regional office of the U.S. and Foreign Commercial Service (USFCS), a division of the Commerce Department's International Trade Administration. …