Considerations when you start exporting

Appointing an agent

If your company is not in a financial position to open offices overseas or to build a sales team then hiring an agent can provide an alternative way to increase your export markets. Research tells us that the choice of local partner is the biggest influencer of a companies’ overseas success.  Many SME’s appoint an agent on a whim. An agent can often be found at a trade show and after a few casual meetings many people sign a standard agreement. Many companies’ sales performance varies and this can depend on the agent selection.

“The single most important lesson from my experience is that agents will do what’s best for their own interests and company”  -  Richard Gladney

If dealing with an agent a company needs to agree on product prices and margins. As an agent is most likely working for other company’s they may be selling competitor’s products and this may impact on your success. One of the big differences that should be considered is that if you are dealing with an agent the title to goods does not pass to them during a sale. This means that if the customer doesn’t pay it is you that bears the financial loss.

 

Export control legislation

This legislation applies to both tangible and intangible exports. The tangible can include software, aviation, chemicals and pharmaceuticals, the intangible can include web downloads, faxes and emails. Should your company be involved in R&D you will need to be aware of the control status of your work. Sharing it with colleagues abroad may need to be licensed by the relevant authorities. A guide was prepared by Enterprise Ireland (2012) to assist in defining if your product is either tangible or intangible.

• What is my product?

 • Where is it being exported to?

• Who is the end-user?

• What is the end-use?

• Are there any other risks or considerations which need to be taken into account?

The Irish customs authorities can carry out audits to enforce Export Control legislation for all items that are exported from Ireland. Failure to comply with legislation can lead to penalties of fines up to €10 million and/or up to five years in imprisonment.  If your company is exporting products or technology to the United States, you are required to comply with the United States re-export control legislation. This will also apply if your suppliers are a foreign affiliate or subsidiary of a US company. 

 

Intellectual property

There can be a lot of competition from production that are similar or identical to your product. By putting a patent over the innovation of your product can be useful for convincing venture capitalists and investors of the commercial opportunities available to your product. 

Plan appropriately to protect your own IP and to avoid the IP rights of others. By managing it carefully you can bring a number of positive to your business:

  • Good IP strategies may be crucial to attract investment.
  • Qualifying patents may attract tax relief.
  • Licensees and technological problem can be identified.
  • Reviewing other patents can avoid you from wasting time.

IP pitfalls to avoid

  • Not registering designs.
  • Not registering trademarks.
  • Applying for patent protection after the product is launched on the market.
  • Not budgeting for the registration of IP.

 

Arbitration

The Arbitration Act 2010 places Ireland in the first-division of countries that have a recognised and internationally accepted code of arbitration law.

An international arbitral award granted in one country can be enforced in another country with ease, in comparison to Irish court orders which can be difficult and costly to enforce in non-EU countries.  By including an arbitration clause in your standard form terms and conditions are a simple way of improving your company’s probability of getting paid.

It is important that the most appropriate person is appointed as arbitrator as the courts have little power to intervene in arbitrations and arbitrators have been given an increased array of powers.

 

“Best practice suggests that traders should implement a comprehensive “Export Management System” or “Internal Compliance Programme”, which documents export compliance processes and procedures”

                                                               John O’Loughlin, Consultant, Customs & International Trade, PwC

 

The Post Coach has teamed up with some of the largest courier companies in the world, the benefit of this is that SME’s can save on costs. For more information on our parcel and pallet delivery service at discounted prices for importing and exporting, contact us today on fiona.black@thepostcoach.com.

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