A Guide to Getting Started in Forest Products Exporting by James Stevens and Scott Dickerson

Department of Forestry • Michigan State University • September 1996

Contents

Introduction | Why Go International? | Getting Started | Making Contacts | Research | Potential Markets | Beginning Export Activities | Government Agencies | Trade Associations | University Sources | Commercial Services | Mechanics of Exporting | Distribution and Freight Forwarding | Financing | ISO 9000 | Keeping Current | Periodicals | Electronic Sources | Trade Shows | Summary | Information Source Addresses & Product Information

Introduction

When managers of small or medium-sized businesses initially investigate exporting, one of the most important and time consuming tasks they encounter is gathering information about international business. There are numerous sources of information to assist them in coordinating their initial export activities. This bulletin is designed to provide a brief description of some of these sources of information and how to obtain them. It is not meant to be exhaustive but rather a starting point for businesses to develop their own network of resources and contacts.

There are several key steps in making the successful transition from purely domestic sales to a mix of domestic and international business:

• evaluating your company’s potential,
• developing an export plan,
• making contacts,
• doing the research, and
• keeping current.

This publication will provide a list of resources to guide you through these steps. It is not meant to be exhaustive but rather a starting point for businesses to develop their own network of resources and contacts.

Going International

Companies entering the international marketplace need to address their reasons for seeking foreign customers, such as increasing market share, disposing of excess inventory, or offsetting seasonal domestic market fluctuations. By systematically evaluating their company's potential prior to entering the international market, managers will be better prepared to start off on the right track, wasting less effort and achieving success more rapidly. One approach to this analysis is to use a computer program, such as Company Readiness to Export (CORE) developed by Michigan State University's Center for International Business and Research. CORE allows managers to respond to questions relating to their company and its products. Based on these responses, numerical scores and interpretations for them, as well as a list of the company's strengths and weaknesses in the context of exporting, are reported. It also provides a set of recommendations and offers a tutorial session which summarizes frequently encountered tasks in exporting.

Many basic questions should be asked by managers in the initial phases of developing an international marketing strategy. These inquiries address subjects such as what type of products to export, what markets are most attractive, what types of financing are required, and which modes of market entry are most feasible. These and other questions will require research to develop an export plan. A publication which answers many common questions associated with exporting is Trade Secrets: The Export Answer Book offered by the Michigan Small Business Development Center .

Getting Started

Making Contacts

The first introduction to the possibilities of exporting often comes in the form of an unsolicited order from a foreign company or a contact made through the course of ordinary business. These companies, seeking U.S. products to import into their country, may have obtained the name of the Michigan forest products producer from a source such as the Michigan Forest Products Manufacturers Directory . By being listed in this directory or a similar regional or national directory, a small business can get exposure through an information source which is widely available to foreign industries and their buyers. The Michigan forest products directory is available on the World Wide Web .

A more proactive starting point for developing overseas contacts is the USDA Foreign Agriculture Service's lists of foreign buyers of forest products. These lists are available by product type and include wood chips, logs, lumber, Christmas trees and many other manufactured products. There is a small charge for each list ordered.

Research

To understand these new international markets, some homework is necessary. There is a tremendous amount of statistical information on world trade available to forest products managers. The National Trade Data Bank CD-ROM provides a wealth of international trade and export data from many US Government agencies. Each month's disk contains the complete data bank of text, time series and tabular data. The disk has search capabilities based on country and product information. The US Government Printing Office offers the World Bank Atlas, which provides demographic and growth information on every country recognized by the World Trade Bank. The US Central Intelligence Agency produces a publication titled World Factbook which contains maps, charts and data for a large selection of countries, and is also available through the US Government Printing Office. These and many other government publications are also available through many local, state and university libraries.

The USDA Forest Service Northeastern Forest Experiment Station publishes the Bulletin of Hardwood Market Statistics, a bulletin which includes US hardwood product imports and exports, in addition to a variety of other publications which pertain to forest products exports. For the Pacific Northwest, the USDA Forest Service Pacific Northwest Research Station also provides research publications concerning forest products, such as the quarterly publication Production, Prices, Employment, and Trade in Northwest Forest Industries.

Potential Markets

When deciding which international markets to enter, a manager should have a comprehensive understanding of the individual country's culture, political climate, transportation infrastructure and market characteristics. Many factors which influence companies in selecting target markets require research on key characteristics of individual markets. Some sources of this type of information can be located in references such as the International Direct Marketing Guide to Canada and the International Marketing Resource Guide, publications of the US Postal Service which cover topics such as selecting a market, reaching the customer, and obtaining market information. The National Trade Data Bank also provides many sources of useful information in assessing markets.

Beginning Export Activities

Low Cost/No Cost International Business Resources from the Michigan Small Business Development Center lists books, guides, periodicals and services useful in initiating business overseas. In addition, there are numerous organizations, both public and private, which assist smaller companies in exporting their products overseas. Some of these are briefly described below.

Government Agencies

There are a variety of local, state and federal government agencies with information for firms interested in expanding into international business. The US Department of Commerce provides information on virtually any topic related to exporting. The International Trade Administration (ITA) promotes world trade and is the official government organization that coordinates all issues concerning trade development, international economic policy and programs, and trade administration. The US Small Business Administration (SBA) offers aid to small or minority exporters through two major programs on business development assistance and financial assistance. Additional federal publications are listed in the appendix .

Trade Associations

There are many forest products trade associations which assist firms in developing overseas business. The American Association of Exporters and Importers provides its member firms with export information. The Small Business Exporters Association represents small- and medium-size exporters, and offers software and publications to help businesses get started in exporting. The American Management Association offers information on exporting and importing. The American Hardwood Export Council (AHEC) serves as an international trade association for the US hardwood industry, and the Lake States Lumber Association supports and encourages wood product exports from this region.

University Sources

Universities throughout the world can provide assistance and advice for both experienced and inexperienced international business managers. Michigan State University's Center for International Business Research provides information and programs to guide managers in expanding overseas. The Center for International Trade Development at Oklahoma State University provides resources and information to new or experienced exporters including seminars, workshops and a culture and language resource center. The University of Washington's Center for International Trade in Forest Products (CINTRAFOR) publishes research reports, newsletters and sponsors workshops related to trade in forest products. The Michigan State University Department of Forestry also provides export guidance and information to forest products manufacturers.

Commercial Services

There are a large number of services to assist a manager in exporting. Many types of firms specialize in assistance for legal, financial, administrative, and operational matters. These services are offered both on-line and through traditional channels. Breaking Into the Trade Game, published by the US Small Business Administration , provides a list of privately published information sources. In addition, there are many private organizations which produce information for exporters listed in Trade Secrets: The Export Answer Book, offered by the Michigan Small Business Development Center .

Mechanics of Exporting

Distribution and Freight Forwarding

The Agricultural Marketing Service of the USDA produces an publication which covers freight forwarding, transportation documentation, methods of payment, insurance and government regulations in a manner which is relevant to the forest products industry. The Bureau of National Affairs offers the Export Reference Manual, which consists of a three-volume loose-leaf reference which is updated weekly. The International Trade Institute sells two guides, A Guide to Export Documentation and A Guide to International Shipping.

Many small companies may find it necessary to export their products through domestic export trading companies. Many trade associations, such as the National Hardwood Lumber Association , offer directories of associated exporters. International Wood Trade Publications, Inc. offers the North American Forest Products Export Directory, which lists numerous export trading companies encompassing a wide variety of forest products. The National Customs Brokers and Forwarders Association of America sells its membership list which can be helpful in locating distributors.

Financing

The US Export-Import Bank (Ex-Imbank) is the US government agency which facilitates the export financing of US goods and services for a wide variety of industries. Ex-Imbank also offers briefing programs which are available to the small business community including regular seminars and group briefings held both within the bank and around the country. In addition, Ex-Imbank's export credit insurance program provides insurance policies for protection against default, and includes a Small Business Insurance Policy which offers assistance in exporting.

The US Small Business Administration (SBA) also offers several forms of financial information which may assist a small business manager. These include The Facts About… Export Revolving Line of Credit Loan Program, which briefly describes the SBA Credit Program with regard to eligibility, amount of loan, use proceeds, collateral, maturity, interest rates, fees, and special program requirements. The SBA also offers a brochure, The Facts About… International Trade Assistance which describes the SBA's many assistance programs. Export Programs: A Business Directory of US Government Services is a publication of the US Department of Commerce Trade Information Center which describes several government sources of assistance for approaching export finance in addition to many other business matters associated with international business.

ISO 9000

The International Organization of Standards has created a set of standards known as the ISO 9000 series, which broadly defines elements of quality in a large variety of industries. This series of quality standards acts as a guideline for companies to achieve high levels of quality in their supply, operations, and distribution systems. Many companies in the European Union now require that their suppliers be certified through this system. Information on this subject may be obtained through the International Division Publications section of the U.S. Chamber of Commerce and the National Institute of Standards and Technology .

Keeping Current

Periodicals

There are a wide variety of international business magazines and newsletters to choose from when seeking export information. Some of these are not industry-specific sources but contain valuable information for managers interested in expanding into foreign markets. Business America is a biweekly magazine published by the Department of Commerce's International Trade Administration, and reports on international trade issues, worldwide trade opportunities, and success stories from American exporters.

Agexporter is a magazine on international trade published by the US Department of Agriculture. Other periodicals are specific to the forest products industry. Wood Products: International Trade And Foreign Markets is published five times a year, covering topics such as the world supply and demand situation for wood products plus market profiles and trade issue articles. Import/Export Wood Purchasing News is a bimonthly publication of hardwood and softwood business trends, articles and trade leads. The Hardwood Review Export contains articles, freight rates, export statistics and regional hardwood prices by species.

Electronic Sources

The Internet is quickly becoming a primary mode of communication between businesses, both domestic and international. In addition, on-line services, FAX services, CD ROM and PC-based software are available to facilitate quicker access to pertinent data and better management of information. The Center for Global Trade offers software on freight forwarders, trade agencies, airports, etc. The International Trade Network offers an e-mail list of advertisements of exports, imports, and international services. The Michigan Small Business Development Center guide, Trade Secrets: The Export Answer Book, lists several international business software and online services. Searches of the World Wide Web can locate many additional sources of information and services.

Trade Shows

An effective method of reaching potential export customers and import suppliers is to participate in international trade shows. This is a relatively inexpensive way to expose products, assess the competition, and meet potential distributors. A manager should decide on the objectives of participating in a trade show prior to the event. The US Department of Commerce offers a publication which provides procedures and guidelines for exhibiting products overseas. The Department of Commerce also offers its Foreign Buyer Program and the Certified Trade Fair Program, which assist managers in meeting foreign buyers and preparing trade show displays and promotional material.

Through the Michigan Jobs Commission, Office of International and National Business Development (INBD), the state of Michigan actively recruits Michigan-based manufacturing companies to participate in catalog and trade shows overseas. Catalog events, conducted as part of a regular exhibition show or in conjunction with the U.S. Department of Commerce, are a very cost-effective way to explore new international markets. They are targeted to an expanding market area and are not industry specific.

A value-added service offered in conjunction with trade shows/missions is the agent/distributor search (ADS). For companies that have identified a specific country market for their product, the ADS offers access to local agents and/or distributors. These searches are conducted by the trade directors in the state of Michigan overseas offices. Appointments with prospective agents/distributors are arranged for the Michigan company at the trade event to maximize the prospect of doing business.

There are several private sources of information on trade shows available to managers interested in exporting, several of which are listed in Trade Secrets: The Export Answer Book. A private source of trade show information is Trade Shows Worldwide published by Gale Research Inc.

Summary

Clearly there is a vast array of information sources about exporting available to today's business managers, and this publication identifies only a few. By accessing some of these sources in the initial stages of international business development, managers may better prepare themselves and their companies to successfully expand their business overseas. As their international business expands, continued use of these sources and services can help to keep a company competitive in the international marketplace.

Information Source Addresses & Product Information

1. (P) = Public Agency

   (I) = Private Company

(A) = Industrial Association

If you have questions or would like additional information, please contact
Dr. Karen Potter-Witter, Professor, MSU Department of Forestry