Exporting

exportGoing global is a big step for many companies or businesses who are only familiar with their domestic market. It is important for the health of your business to really know why you want to export. On average, it takes about a three-year commitment to establish a presence in a foreign market. This will require the resources of people and finances during this developmental period. Checking the feasibility of the venture is an obvious exercise before you go global.

You may want to examine whether your interest in exporting is market driven, or product/service driven. Here’s the difference…a market driven entry would look at “what the foreign market wants, and how you will fulfil that need”. A product/ service driven entry would be, “here’s what my company offers, now let’s find sales in a foreign country”.

The common link is that both require feasibility and a lot of resource planning.

Steps to follow before starting to export

dsm_portA recommended first step is diagnosing and evaluating your business or current resources. If this confirms your commitment to export. Proceed with the next step, the Export Business Plan. Prior to spending a tremendous amount of research time on developing your export plan, the diagnostic will help you evaluate whether your objectives for exploring foreign market will be satisfied and whether the risks of the venture are truly worth the returns. Should your diagnostic confirm your firm’s export readiness, then proceed with the export planning process. The Export Business Plan will evaluate the country risk, the target market(s), the demographics, the market demand and needs, the currency and commercial risks, the legal aspects, the logistics of delivering the product or service, and of course, the financial implications involved in an export transaction.

Preliminary Diagnostics

Knowing your industry is important for the present and the future of your business. In the Industry

Diagnostic, the items to examine are the current trends and the growth potential of your industry. A declining industry, a highly competitive industry, or a saturated domestic industry may motivate seeking growth potential in markets abroad. In the Company Diagnostic, it is extremely important that you know management’s commitment to exporting, available financial and human resources, and production capabilities.

The following are steps to follow:-

 

A. Industry Diagnostic:

Describe your industry

Here MSMEs needs to assess themselves and what they want to export guided by the following assessment questions:

  • What are the industry trends: growth, decline, stagnant, saturated, increased competition?

  • How does the industry overall measure in the global marketplace? i.e. What percentage of the industry output is exported (increasing or decreasing)? How competitive is the industry in the international marketplace?

  • What is currently exported from this industry, and to where?

  • What government and association studies have been developed for the industry? (Foreign and domestic)

B. Company Diagnostic:

Give a description of your business in terms of history, ownership structure, growth pattern, staff numbers, number of points of service, etc. over the recent years.

  • How well does your small business compete in your industry?

  • What are your goals and objectives for considering exporting? (An overly competitive domestic market, a surplus of product or production capacity, need for exchange of new ideas and technologies, a “hot” market, greater economies of scale?)

  • How financially stable is your company at this time and the foreseeable future? International business may mean additional costs and delays in cash flow.

  • Evaluate your staff for international experiences and capabilities? (i.e. languages, foreign travel, contacts, education). Can staff be assigned to the exporting project? What additional support will they require? (i.e. budgets, equipment, training, management commitment). To what degree can the organization accept change (going international)?

  • How much can your plant produce or your company service in a given time frame? Can you keep up with foreign demands, without sacrificing any domestic business? How reliable are suppliers and methods of transportation? What contingency plans are in place if a disruption occurs?

  • What external expertise such as other suppliers, freight forwarders, customs brokers, international lawyers, accountants, banking divisions, consultants, and other international support organizations, will you require to supplement internal skill deficits?

Export Business Plan Outline

A. Cover Page

Consists of the name of the plan and creation date.

B. Table of Contents

This part includes what is going to be written in your business plan; it gives the insight of general content of your plan

 

C. Executive Summary

In this you suppose to give a summarized information on what your business plan is about. The summary will have to contain all the important details of your plan, for example what economic and market benefits you expect from engaging in this international business, possible setbacks and their alternatives, etc.

 

 

D. Company Description

Provide description of your business in terms of history, ownership structure, growth pattern, staff numbers, number of points of service, etc. These descriptions have to be of over a certain period like a year, two years, etc.

 

 

E. Product/Service Description

Give a complete picture of the nature of services/products you offer, why offering the kind of service/product concerned. Unique selling attribute or competitive advantage(s); Typical profile of end users; Describe required product modifications; Seasonality and life cycle of your product or service; and Intellectual property protection. Also MSMEs needs to know the growth potential of the planned business in the foreign market

 

 

 

F. New Foreign Marketplace Analysis

This involves asking several analytical question like is exporting part of your business goals and objectives?;

Why your business want to enter this particular foreign market(s) over other business prospects in your local market?. What is the profile of that country: things like foreign countries political condition; Infrastructure conditions (e.g. roads, ports, rail, airports, telephones, and communications, etc.); laws and regulations governing business activities; economic status; taxation structure; social conditions; cultural and business practices?

Also MSMEs needs to know the profile of the business intended, things to consider are like direct customers identification, MSMEs have to identify (e.g. buyers, agents, distributors, trading houses) or actual end users (e.g. individuals, businesses) and current market trends

 

  • Business Competition analysis is something MSMEs needs to do before going to the new foreign market. Existing competitors and their: Strengths, Weaknesses, Opportunities, and Threats (SWOT) in the foreign marketplace

     

     

     

G. Market Entry Strategies

Strategic Alliance like:Co-marketing, Co-production, Joint venturing, Licensing, Franchising, etc.). Apart from that MSMEs also needs to know their customer profile direct and indirect customers (retailers and wholesalers), also needs to know about purchasing decision makers, unique selling attribute of the products in the marketand total market size and future growth potential

Apart from that MSMEs have to consider the issue of selling strategies, in this MSMEs have to know export cost and other related costs before deciding the price of product/service

 

 

 

H. International Law (legal counsel required)

Here MSMEs are supposed to know all the matters concerning business dispute resolutions; language considerations, which requires the language used in doing business must be known by both parties; contract terms and conditions; applicable foreign laws and regulations on product disadvantage consideration; Intellectual property rights protection in the foreign market; and sales agent and distributor contract agreements.

 

 

 

I. Financial Analysis (accounting advice recommended)

MSMEs here assess the viability, stability and profitability of a business, sub-business or project before decided the complete conduction of the business.

 

 

 

J. Risk Management

This involves identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events,or to maximize the realization of opportuniti

 

 

 

Export procedures

Exports are free of duty and taxes except for two items; Raw hides and skins that are chargeable at the rate of 60% of FOB value or TSHS 600/= per kg whichever is higher and Raw cashew nuts that are levied at the rate of 10% computed on FOB value or USD 160 per metric ton whichever is higher

 

Processing export documents.

  1. The exporter is required to appoint a Clearing and Forwarding Agent (CFA) to process his/her export documents.Documentation process is done online and completed before examination of goods and export release

  2. The exporter hands over the documents either manually or electronically to the CFA who uploads them in the Tanzania Customs Integrated System (TANCIS) together with all attachment of relevant documents including permits from Other Government Departments (OGD) to TRA.OGDs verify permit if any (reject or approval).

  3. Assessment of export taxes and duties if any, here the CFA on behalf of its customer has to know based on the exported goods all associated taxes and duties concerned.

  4. CFA make booking of container(s) from shipping line/agent.

  5. Stuffing of export cargo into container(s) under supervision of TRA and Other Government Departments (OGDs)

  6. Shipping line/agent submit to TRA export vessel schedule information.TRA audit (approve/reject) loading declaration (approved loading declaration automatically disseminated to Terminal operator as Loading List and becomes expected carry in)

  7. Gate check in conformation by TRA terminal gate, then terminal submits Carry in report to TRA to confirm arrival of export cargo at Terminal.

  8. Loading result report (short/normal loaded cargo) submitted by terminal to TRA. Then you get conformation of loading report by TRA

  9. Submission of Export manifest by Shipping Line/Agent to TRA. TRA Audit ( approve) export manifest (automatically strike off inventory from terminal)

NB: Other stations exclude Dar EsSalaam and Tunduma

The exporter hands over the documents either manually or electronically to the CFA who uploads them in the Automated Systems for Customs Data (ASYCUDA++) and lodges the same to TRA; whereby a reference number is automatically generated.

The exporter shall inform the customs before loading the goods in the container or truck as the customs officer shall witness the loading process

 

 

 

 

Required documents

The following documents shall be produced for export:

  • Invoice is a written record of goods or services provided and the amount charged for them, sent to a customer or employer as a request for payment

  • Parking listis an itemized list of articles usually included in each shipping package, giving the quantity, description, and weight of the contents. Prepared by the shipper and sent to the consignee for accurate tallying of the delivered goods. It also called bill of parcels, packing slip, or unpacking note.

  • TIN certificate(exporter)

  • Authorization letter

  • Export certificates from relevant Authorities depending on nature of the goods to be exported; these include:

  1. Certificates from Food and Drugs Authority

  2. Certificates from Ministry of Agriculture for crops

  3. Certificates from ministry of mines for minerals

  4. Certificates from Ministry of Natural Resources

Licensing and registration requirements

  • Doing any business requires one to obtain a valid trading or business licence from the city, municipality or local authority. In order to be given a licence one also needs to have an account with a commercial bank.

  • As for export business, there are additional procedures and documentation needed. These include filling in the shipping documents and Single Bill of Entry (SBE) which is declaration by an importer or exporter of the exact nature, precise quantity and value of goods that have landed or are being shipped out. Prepared by a qualified customs clerk or broker, it is examined by customs authorities for its accuracy and conformity with the tariff and regulations.

  • Export licences in Tanzania are not required except for few products considered sensitive. These include wildlife products whose licences are issued by the Wildlife Department, Forestry products by the Forestry Department and fishery products under the Fishing Department.

  • Other traditional products that require a clearance or permit from the respective marketing boards, before they can be exported, include coffee, tea, sisal, pyrethrum, tobacco, cotton and strategic grains.

NOTE

– All licences and permits are renewable on an annual basis but some items are consignment controlled, e.g. CITES certificates for wildlife products.

– Export Registration is no longer practised

– Trading/business licences are obtainable from City, Municipality or Town Authorities.

– To open an account with a commercial bank is obligatory

Products that require an export licence

Produces that requires clearance / Permit from a relevant department or institution