Posts Tagged ‘Export’

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December 16th, 2011

Exporters, are you still optimistic about 2012?

Last May I published a blog about renewed enthusiasm for exports. Unfortunately, the economic news have been anything but good since then: the financial crisis has deepened in Europe, U.S. unemployment is at a standstill, the financial markets are collapsing, the U.S. is again contemplating a “Buy American” clause in its new recovery plan, a double-dip recession is a growing possibility, the Canadian dollar is anything but stable, and the list goes on. It’s hard to be optimistic these days.

I was therefore rather surprised to read the EDC’s fall 2011 global export forecast in which Peter Hall and his team maintain their bullish spring outlook for Canadian exports for both this year and next. EDC predicts, among other things that “the world economy will capitalize on the current increase in underlying activity, and continue to find remedies for the shocks and weaknesses that beset near-term growth, tiding the economy through to better times” (page 5). As such, EDC is projecting positive growth for global GDP and for Canadian exports in 2011 and 2012. Thus, Canadian exports will increase by 12% in 2011, the same as in 2010, and 7% in 2012. The figures for Quebec are 4% for this year and 7% in 2012. (more…)

November 1st, 2011

Understanding the mechanism of the letter of credit

In a recent article (http://www.cqinternational.org/index.php?page=118), our colleague Liliana Salazar, export advisor at Carrefour Québec International, talks about a tool that most exporters know, but that is not always understood: the letter of credit. As she explains in her column, the letter of credit is an “arrangement between financial institutions for the settlement of a transaction against presentation of stipulated documents and within a prescribed period. This regulation ensures the exporter the settlement of the transaction once it has demonstrated, with supporting documentation, that the goods have been delivered to the client abroad.”

In an environment where companies are turning increasingly to less developed, and therefore more risky, markets for their exports, the letter of credit is a very interesting tool to make sure of being paid. In addition to explaining the mechanism, the article outlines the various benefits of the letter of credit for both the exporter and the importer.

Bruno Seguin

October 7th, 2011

Are the EU’s 12 new members a gateway to Europe?

The guest speaker at our last LTIBC Export Network meeting was Martin Lampron, president of Xpand Group, an international business consulting firm with offices in San José (Costa Rica), Montreal and Paris. In keeping with the theme of business opportunities in Europe, Lampron presented the results of a study he conducted for the Costa Rican government on emerging European markets, adapted to Laval companies’ reality. (more…)

December 14th, 2010

Tips to do business with big box stores in the U. S.

For Quebec SMEs, doing business with big box stores buyers could be a dream and be synonymous with making money. Unfortunately, it can also be synonymous of bankruptcy if all the preliminary planning isn’t done before dealing with them. During the last year I accompanied some Laval representatives in their individual meetings with buyers from hardware stores in the U.S. You will find some of my observations and recommendations below.

Price strategy

The buyers work with providers from all over the world and their main criterion to select a new provider is cost. This is why some buy up to 50% of their supplies from China. It is really hard for Quebec companies to be price competitive especially for mass market products. I have seen many business meetings start with the question: What is the cost for your products delivered to our warehouse? If your price doesn’t fit within their price range, they will lose interest even if your products are of better quality.

When they do a product line review, for example, they will ask all the potential providers to exhibit in their showroom, then buyers walk around and ask you questions about pricing. So be prepared to answer and have competitive prices!

Delivery policies

When you negotiate a contract with them, they will give you a specific time schedule for delivery. If you don’t respect the lead time, expect to pay a penalty. This is why you should know how to file documentation in order to avoid any trouble at the U.S. border.

Buy-back policy

During the line review, the big box stores may decide to replace the actual product with yours. Some hardware stores don’t have a buy-back policy and may ask you to buy your competitor’s product in order for you to do business with them.

Defect product policy

When you negotiate your contract with big box stores be aware of the future consequences of the option you take for any defective products. It could result in diminishing your profit. Remember, when you do business with them, you will have to lower your profit margin, accepting to sell large quantities but loose on margins.

They will not sell your products for you!

Vendors don’t have time to sell your product so it must come with a marketing program in order to facilitate its penetration. Pay particular attention to your packaging as it should be clear and self-explanatory. I suggest that you come up with a selling strategy that will help them sell your product. Keep in mind that some stores don’t have vendor training available. So, they are ill-equipped to inform customers about your product. Be really creative with your selling strategy and allow your budget to include this necessary cost. It will pay in the long run.

In conclusion, doing business with those big box stores is not for all SMEs. You need to be well prepared for your first meeting, making sure you have the production capacity and the transport logistic for delivery in place. Should you need more information on how to do business with hardware stores in the U.S., do not hesitate to contact me.

Caroline Bouchard

December 13th, 2010

An update on the Canada-EU free trade talks

According to European Union (EU) statistics, the value of bilateral trade in goods and services amounted € 58.7 billion in 2009. While Canada imports more goods and services than it exports, the EU nonetheless is the second largest export market outside the U.S. for both Quebec and Canada. Still, besides the geographical distance, there are numerous tariff and non-tariff barriers curbing Canada-EU trade, which is still just a fraction of Canada’s trade volume with the U.S.

At a time when the U.S. recession and the strong dollar is causing Canadian entrepreneurs to increasingly look towards less traditional export markets, reinforcing trade with Europe can only be good for Quebec and Canada. For example, according to a Canada-EU joint study, the impact of removing readily-quantifiable factors affecting bilateral trade would create some C$12 billion in direct spinoffs for Canada.

During a conference organized on November 10 by IE Canada, the Canadian Association of Importers and Exporters, I had the chance to find out how the Canada-EU free trade talks are progressing. In fact, one of the keynote speakers was Me Pierre-Marc Johnson, head negotiator for the Quebec government in talks with the EU.

While several points are rather complex and sensitive, such as issues concerning product certification, labour mobility, supply management and agriculture, negotiations are moving quickly and easily. Both parties have submitted their requests and are working on reaching an amicable agreement on each point to avoid any surprises when their reciprocal offers are filed officially. In this sense,  90% of the tariffs have already been negotiated and all the parties agree that the talks are on track for completion by the end of 2011.

Quebec SMEs stand to benefit from the implementation of such an agreement over the next few years. In addition, since the agreement’s implementation will likely coincide with the European economic recovery, it will be that much easier for companies to tap into the resulting opportunities. Keep a close eye on Europe over the next few years and feel free to let us know about your projects. While barriers will ultimately be relaxed, Europe is still a huge, highly complex and diversified market where you need a lot of resources and a solid strategy to succeed. We would be most pleased to help you in this regard.

By Bruno Séguin

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