EXPORTS OUR L1FE-BLC IN THE POST-WAR ERA
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An Expert, with Over 30 Years' Experier Work, Explains Some of the Finer Poi
Selling Oversea:
and Export
; Success Ili By A. S. Hipper THE Government has now decided to give assistance and to encourage merchants and manufacturers to make connections with overseas buyers in an endeavour to build up a post-wai export trade at least 59 per cent. greater than it was pre-war.
Are you thinking of this and preparing for the boom which will surely come if the British exporter is ready with his plans to go ahead immediately peace is declared? British goods have always ranked high in quality and will again if the exporter and manufacturer be willing to study the prospective buyer's requirements.
This article is intended as a guide to the prospective exporter, and the writer will endeavour to show what is required in order to obtain a share in export trade.
There is, already, evidence of inquiries from overseas for all classes of vehicle, and tractor and spare parts and accessories. Are you ready to quote? The following arc a few points that should be considered when commencing your export drive:—Your agent ; goods; -quotation ; shipping and insurance organizations; how you will deliver and how payment will be made.
I will enlarge and explain these points, one by one.
Your Agent.—An agent must be one who knows how to sell your goods, explain how they work, and must be in a position to show the goods you make and to advertise them locally. It is difficult for an undertaking in England to advertise in a foreign paper without knowing the ways of the country selected. This type of advertising, therefore, Must be left to your agent, but the seller must be prepared to pay at least a share of the advertising expenses. The amount contributed would, of course, be by mutual arrangement and the seller should request that copies of the papers, or trade books, be sent to him at regular intervals so that he can keep a check on the quality of the advertising put out.
The Question of Agent's Territory The position of the agent should be carefully considered; it is no use appointing one in Cairo for South Africa, and wonder why you get no orders for the South African market. The agent must be domiciled in the area-for which he holds the agency: rather appoint several agents than have only one covering an area which is so large that he cannot possibly do his job properly.
Of course, if an agent he able to appoint suitable subagents in a large territory, that proposition should be given consideration. . .
Your Goods.—Most British goods are primarily intended for home consumption and works and tools are laid out 5ccordingly, but the manufacturer must realize that the standard practice is not always suitable to overseas buyers, and that sometimes a small alteration will make an article much more acceptable overseas. In this case the seller must be guided by his agent who should advise where such alterations would be beneficial to the sale of the goods.
Once the overseas buyer secs that he can obtainwhat he wants, and not what the seller wants him to have, then orders will come in, and repeat orders follow so long as the quality be maintained.
Your Quotation.—This will obtain business, but it can also lose your business. Always quote c.i.f. (cost, insurance and freight) or, in other words, for delivery to the buyer's nearest port. The old method of quoting f.o.b. will not do if you wish to obtain a share in the export boom that is coming, as buyers abroad will not go to the trouble to obtain rates of freight, or rates of insurance, and then work out, tee cost of the article, especially when the currency is different.
If you are selling to Brazil, then your quotation must be in Brazilian currency. When the buyer sees the price of the goods he requires in his own currency and delivered at his own port, then, as British goods have such a good reputation for.quality, orders will be received although the price may be slightly higher.
Shipping Organization.—Whilst this will not affect the overseas buyer, it will have a great effect on your quotation and delivery. If your works be small and you are unable to employ a special staff to handle your shipping, find a good shipping agent to do the work that you would expect to be done by your shipping department. A good agent can save you pounds by knowing " how to do it."
Now to come back to your own staff. You are thinking about going in for export business in a fairly large way, so you get together your selling organization and you think it will be necessary to have a ,shipping dePartment to find out all the details of freights, insurance, steamer routes, dates, etc. You go to Mr. Jones, who is probably in the costing department, and say to him:" Mr. Jones, we want you to take over our new shipping department." He is quite willing, because he can see an improvement in his position. Have you thought, however, just what Mr. Jones knows about the finer points of shipping? Does he know how to make up a freight quotation, or what terms and conditions to look for in an insurance quotation to suit the particular shipment? Does he know how to pack the goods in order to save freight and packing costs or bow goods should be packed for a special market?,,
More of the Finer Points Another point, does Mr. Jones know how to apply for an export licence and then, when received and the goods are ready for shipment, to pass the necessary entries through the Customs House? Does he know how to register your cargo to obtain shipping space, also to Check and pay the necessary dock charges, etc:, that may be incurred, and the hundred and one different things that have to be done before a shipment is completed? Can he make up bills of lading; can he check the freight account to see that the correct rates have been charged after the shipment has been made and, lastly, does he know what amounts for which to insure and the basis of values for such insurances?
I doubt if Mr. Jones does know these special points. You wonder why your prices are always higher than your competitor and why you do not obtain the overseas orders that you were keen to get.
Find a good agent—a man of experience—and Make a friend of him, but do not think that he can give you his time and experience for notlaing. Tell him your ideas and ask for his advice and costs for delivery to such and such a place or market. He will then tell you what information he requires from you to enable him to make up for you a c.i.f. quotation. You will know that you are getting a correct quotation, and that you do stand a reasonable chance of getting an order provided your working costs be right.
He will he able to tell you if your make-up is in order and if your packing is correct, because it is no good sending in dozens if the country is used to the decimal basis of tens and hundreds. Your goods must be quoted for in the manner understood by your buyer. Little things like this play a large part in obtaining orders when the overseas buyer is looking through several quotations and comparing prices. A good shipping agent or, perhaps, I should say, shipping adviser, will be able to put you right on most of these facts, Now to take the shipping of heavy vehicles such as buses, trolleybuses, tractors and the like—a skilled shipping man knows how these should be handled for shipment; he could advise if the vehicle should be broken down or shipped, unpacked, onits own wheels. This often depends on the place to which it is consigned, the facilities for handling at the port of loading and discharge, whether the lifting operations are likely to strain the wheels, the ctricsis or the mechanism; incorrect lifting at the docks can soon damage an unpacked bus or other large vehicle. The cost ot employing a skilled man as an adviser may not seem cheap by looking at the actual cost, hut it is very much cheaper than employing an inexperienced staff whose expenses would be added to your overheads. The cost of an experienced men would be small when looked at from this angle, and would he well worth the expense.
Your Insurance Organization.—This is usually attended to by an insurance broker, another skilled man, and is generally an additional part of the shipping agent's work, as he usually works with a broker who takes his guidance as to the risk, from the information given him by the shipping agent, as to the voyage, the packing, delivery 'methods, stowage, etc.
Keeping Down Premiums The brokei is then able to explain to the insurance underwriter exactly what is required, and the rate of premium is based accordingly. A saving in premiums can he made by the broker having the correct information as to the risk involved, and what special risks should be covered; if the usual f.p.a. or w.a. risks are now sufficient and where the risk starts and finishes.
Delivery of your Goods.—lisually, when you receive an order from overseas you are asked what delivery you can make. It may he three months; well, you must deliver in three months, not four or five months. Many repeat orders are lost to your competitors because you do not keep to your delivery dates, and this is often more important than the price, especially when goods arc required for a seasonable job. The work of many weeks might be held up owing to the late delivery of somespecial part.
How Payment will be Made.—This is one of the most important points that the exporter looks for, and rightly so, because how can he carry on if he parts with his goods without payment, and just trusts to the honesty of the buyer to remit the amount of his invoice?
Now, there are several ways of obtaining payment and I will name just a few :—By letter of credit; by drawing a bill of exchange; by payment through a confirming house. These are the three main ways of obtaining payment, and perhaps a little explanation of each may he useful.
Letter of Credit.—The buyer arranges with his bank to open a credit for Blank and Co. (the sellers) on London. This is usually done with the London bank which is the agent for the buyer's bank, to pay for, say. six motor vehicles (or, of course, any other goods), valued at, say, £6.000, delivered to the buyer's nearest port as arranged, being subject to the usual conditions as to material, type, etc., and the seller will be paid the amount of his invoice, not exceeding the above amount, and provided the undermentioned -documents be presented before a certain date. The documents are usually as follow:—Complete set of bills of lading; necessary invoices; insurance policy covering the full value of the goods; shipping specification of the packages; Consular papers as may be necessary; any other papers or documents, according to the place of delivery.
If all the vehicles, or goods, be shipped at one time, the seller will then receive his payment from the bank immediately, that is, of course, if all documents and the terms of the credit have been fully complied with. By Drawing a this case the buyer instructs the seller to draw on him for the value of his invoice, together with the necessary shipping documents attached, through the Blank bank at Blank, the buyer's town (this is usually the buyer's own bank) at sight, or 30-days' sight, or whatever period is arranged.
In this case it is necessary to draw a bill and to attach the bills of lading, invoices, shipping specification, Consular papers, etc., as may be necessary, and then hand the complete set of documents to the seller's own bank with instructions to forward the bill and documents to Blank for collection of the cash. If the bill be what is called a sight draft, then the buyer must accept it for immediate payment by his bank, and when this is done the seller's hank will hand over the documents, which is. in effect, handing over the goods. If, however, the bill be drawn at 30or 60-days' sight this means that it will be met 30 or 60 days after it has been accepted by the buyer, so that, actually, the buyer does not pay for the goods until 30 or 60 days have passed,
By Payment through a Confirming House.—A confirming house is an agent for the buyer who pays for goods ordered by him (the buyer) through the manufacturer's agent abroad. Sometimes the confirming agent takes delivery, c.i.f., and sometimes f.o.b., and then arranges the shipment. Whichever method be used the manufacturer receives payment so soon as the goods are delivered and shipped, the agent receiving such documents as are required by the terms of the.order. The agent then draws on the buyer for payment in accordance with arrangements he has made dealing with such purchases.
In all matters regarding the payment of goods, where the seller has to draw through a bank, it is, of course, best for the seller to consult his bank manager. He will always advise as to the best way to deal with such orders, advising also as to the correct documents required, the terms of letters of credit, drawing conditions, and the standing of the buyers or confirming houses with whom the sel:er has to deal.
The foregoing is the main outline covering the exporting of goods and the practice relating to it, but it must he borne in mind that every trade has its own special ways of being handled.
As pointed out, if a concern is going to have its own shipping department it must see that its export trade is sufficient to justify engaging an experienced man to handle it. It must be run as a department and, as such, it must pay its way. If you cannot see sufficient business to keep a shipping department fully employed for 52 weeks in the year, then that department is going to be a drag on your business as a whole.
An Experienced Man Essential
A shipping department needs an experienced man in charge—one who has grown up in shipping, and has learned the -fine points relative to the packing of goods in order to save freight and shipping space, and thereby save packing costs, whether it be cases or bales. How to pack for this or that country: to realize the sort of journey the goods have to make before they are finally delivered to the buyer.
Each country has its own requirements. He must know the steamship lines, the ports the steamers sail from, and the most suitable port in relation to your works: It is no use quoting for shipment from London or _Liverpool for every enquiry received. In some trades only London is used, and others Glasgow. Again, you have the choice of, say. London, or Liverpool, or Middlesbrough; every trade is different.
Your shipping man should know these points so that you are in a position to quote either c.i.f. or f.o.b. He should know that you will be quoting the best terms and that your price is for delivery via the most suitable port, from your works to the required destination.
From what has been said it will be appreciated that the shipping man must know everything connected with ?hipping, be able to give advice on the delivery to docks, he must also know some of the finer points of marine insurance as applied to the shipping of goods.
If, after due consideration, it he felt that you cannot make your shipping department pay for itself, then you should look around for a good shipping agent, who will handle your shipping and he able to advise on the various points necessary to enable you to compete with overseas markets. One thing to remember is that if kou require a good shipping adviser it may be necessary to pay him a fee in accordance with the information he will be required to give you, but, whatever fee you pay, it will' be but a small addition to your overhead charges and would be infinitely less than the cost of running a, shipping department.
You would not have high salaries running on week after week, and you would pay only for the work done. Of course, one would say that the shipping department, when it is not busy, could help in another department, but are you going to get the experienced man to take over another makeshift job every time he is. not busy? No. By that method you cannot expect the best, you would get only a second-rate man who does not know his job properly—the finer points of his work—and, therefore, your prices will not he the best and competitive.
Goods Must Suit the Market • It may not be out of place, here, to make special mention of the requirements which are needed abroad, When submitting samples or drawings of goods, or vehicles, etc., one must always remember that a standard British article may not be quite suitable for the particular market. Tnke, for instance, a first-class road, as it is designated in some parts of the Empire and some foreign countries. It is nothing like that which we understand as a first-class road in England; Wprobably has only a hard earth surface, and when it rains it just becomes two sets of grooves. In consequence, a low)slung vehicle would simply get stuck. Then again, some of these roads dry out very quickly, and then become quite hard. If the truck be not high-slung the bottom would be ripped out and the axles damaged.
Most American road vehicles are given this high clearance,
and that is why the Americans have, in most cases, been able to get the plums from the overseas markets. Another point to be remembered, is the question of spare parts; you must see that your agent carries a large supply. consistent, of course, with the size of his market, as no man is going to buy a lorry if he is in any doubt about being able to get spares when they are urgently needed.
Spare Parts Govern Sales
The question of spare parts brings us to another point— financial aid to your agent to enable him to carry the necessary supply. No agent, or very few, is able to keep 21,000-A2,000 worth of spares locked up and this is the normal requirement of a medium-sized territory. Therefore, if the motor manufacturer desires his sales to be pushed, he must make arrangements so that a proportion of the floating stock is financed partly by the manufacturer and partly by the agent. It is in their mutual interests and is often only a matter of arrangement. Remember, the larger the stocks of spares the bigger are the cha aces of selling the finished vehicle.
This article is directed towards those British concerns which have not, in the past, been active in the export trade, but the goods of which are wanted and could be sold all over the world if the matter were tackled in the right way. Of course, one ot the best ways of deciding -who shall handle your goads abroad is for a director or senior official to travel overseas and make contacts, but, and a very large but, it must be a man who knows the goods he is going to sell and one who is prepared to demonstrate the best way of using those goods. Personal contact with the light man and by the right man means everything in the export trade.