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Export 101 - Trade
Leads
Frequently Asked Questions
(FAQs)
What is a "trade lead"?
Where can I find food and agricultural
trade leads?
How do
I search for trade leads on the Internet? (from March 2000 MIATCO newsletter)
How do I respond to trade leads? How do I qualify a trade lead?What does it mean when a Mexican trade leads request a
price list for product "DAF?"
(from July 2001 MIATCO newsletter)
1. What is a "trade
lead"?
Trade leads are requests for products, as well as
quotations to place them at a given volume and value at a named point,
where title should be transferred. They are readily accessible via the
Internet, where they are often updated on a daily basis, but are also
available on CD-ROM and in printed form. The only implied downside to
leads that are not updated is that they may be perceived to be "stale"
by the time you review them. But the fact that a firm was looking for a
quotation for a product last month, or even last year, does not
necessarily mean they are no longer looking, so all leads have some
inherent value. Remember, these are business people who are interested
in making a profit, and if you approach them correctly, with products
appropriately priced to sell in their market, it may not matter how old
the lead is. With proper research, you will find that many overseas
firms have entered trade leads into systems over a lengthy period of
time, indicating their ongoing interest in locating U.S. food products.
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2. Where
can I find food and agricultural trade leads?
The Trade Lead Links listed in this section (for
example, www.fas.usda.gov) are some of the best
resources in the market. Some of the links provided may require a subscription fee, but
most are free of charge. Keep in mind that many of these links also provide you with an
opportunity to "post" your own trade leads. As a seller, you may introduce your
company and product line to people all around the world. A single entry may also be
reposted to a number of "bulletin boards" of other trade lead systems. You will
find your lead in "offers to sell" rather than "offers to buy." It is
a very inexpensive and efficient way to create global awareness about your business.
You should also be aware that some of these sites
may provide access to market research reports that contain importer and distributor lists.
You can usually locate these "leads" near the end of the report. (See the
report’s table of contents.) For more information about market research, see the
"Market Research" chapter of this Export 101 section.
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3. How do I search for trade leads on the Internet?
One of the best ways to search for trade leads
is by the applicable harmonized system number (HS Code), the first six digits of the
10-digit "Schedule B" number that we use in the United States. The HS Code is an
internationally accepted product identification system that is used worldwide for
categorizing products by number, rather than by name. This coding system prevents
miscommunication between people who may use different names for the same product (i.e.
"french fries" in the United States are called "chips" in the United
Kingdom). If you know the HS Code for your product, you can often sort by this number and
all of the buyers seeking that product will appear.
In addition to searching for leads by the HS Code,
you have several other search possibilities. You can sort by the name of the product, or
by country, date, year, name of company, size of company, etc. When searching by product
name, be sure to run several different kinds of searches, including a search by product
category rather than just the specific product name (i.e. soy as well as soybeans
and soybean oil).
You can learn more about the Harmonized System and
look up your Schedule B Numbers online from the U.S. Census Bureau at www.census.gov/foreign-trade/www.
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4. How do I respond to trade leads?
The most important element of your response is to
give them the precise information they are looking for. That would include the terms of
sale and terms of payment, the documents required, the language requirements for labeling,
etc. This means you need to know the language of international trade to succeed in this
endeavor – i.e. what "CIF Keelung" means, what is an "LC" or
"T/T," etc. Many foreign business people complain about the lack of
comprehension of export fundamentals by American exporters. It is thus crucial that you
educate yourself as well as possible on the details of exporting before beginning to
respond.
Also, consider your pricing on these quotes. You
are trying to gain a foothold in a foreign country. There is a tremendous amount of price
escalation involved in moving products between your facility and the buyers. Shipping,
handling, documentation, inspections, insurance, duties, taxes, and delivery are all going
to raise the cost of the goods to the buyer, who still needs to sell the product at a
profit. Often you will need to be flexible in your pricing, and consider a reduced profit
margin in your export sales, in order to establish a mutually cooperative business
relationship over the long term.
It is also important to consider the
"protocol" of international communications. Foreign cultures operate in a very
"high context" environment. That means that how something is said is often more
important than what is said. Try to avoid being blunt, forward, aggressive, or any other
manner that makes it sound as if you only want to "sell." This is because most
cultures don’t just want to buy, even if it is a trade lead. They want to get to know
you, and learn about your company’s products and history.
And, if you do not hear back right away, don’t
worry. Business takes much longer in an international setting. Many people’s concept
of time is much different than ours. Remind yourself to send a follow up reminder to them
in about 2 – 3 weeks, and then move on to the next lead. Consider a 10% response rate
to your quotes as exceptional.
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5. How
do I qualify a trade lead?
Trade leads come in a variety of forms, but are
usually from a U.S. federal or state agency, or from a private site. The Internet
addresses ending in "gov" mean are from government sites. Sites ending in
"org" indicate that the site is a non-profit entity, and those ending in
"com" are of course commercial and many times may be fee-based. After
researching for a while, you may notice some of the leads being shared between sites and
thus cross-listed in a variety of places, including bulletin boards, government agencies,
and non-profits. You may find that, between two websites, a lead that you have accessed
from a different site is now "discolored." This is helpful in your evaluation of
just what is being shared by whom.
Trade leads coming from the government, although
with a disclaimer, are known to be of a higher quality than those from many of the private
sights. The government leads are processed by federal or state employees who work, in a
sense, for "us," and it is their job to try and ensure the most reliable
information. You will note that in private sites, much of the information is spelled
wrong, runs off the page, or is unclear. This is because the leads have been posted
directly by the individuals, and have usually not been reviewed or edited by anyone. That
does not mean the leads are poor, but are in more of a raw format. If the lead appears
frantic, asks for too many different types of products, or is deceptive in appearance,
place them on the "back burner" and search for leads that are professional,
clear, realistic, and sincere.
At this point, "qualifying" the leads in
any other fashion is premature, since you may have so many from which to choose. Wait for
a response before you decide how serious the buyer may be. Then, develop a template on
your letterhead that serves as a distributor evaluation form, requesting details about the
companies’ business, finances, staffing and goals. You may also request a business
reference, both from the USA and from abroad. Many of the government leads already have
some references and financial information posted on them. As the business is developing,
you may want to obtain a background check on the buyer from your bank or another private
enterprise that serves that market. Your state or federal export assistance agencies may
provide further assistance in these areas.
You may also wish to visit the following chapter
from the TradePort web site entitled "Making Export Sales" for other suggestions
and ideas: www.tradeport.org/ts/trade_expert/infobase/exportbasiscs/chapter4.html
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6. What does
it mean when a Mexican trade leads request a price list for product
"DAF?"
DAF is one of the Incoterms and means
"Delivered at Frontier." DAF
is commonly used by Mexican importers because exporters are not allowed to
clear goods through customs in Mexico. All goods must be
cleared at the port of entry, for example Laredo, Texas, the busiest
crossing point between the two countries.
Under this term you need to place your goods, cleared
for export, at the named place on the frontier, but before the customs
border of Mexico. In this case, the buyer pays all freight charges
from the moment of transfer-of-risks, as well as all duties, taxes and
other official costs, and charges for customs formalities upon
import.
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