International Trade is a Chain of Events, not a Single Task
International trade involves many skills and disciplines, beginning with identifying potential markets, researching them and developing sales opportunities. See the Three Golden Steps for more information.
The title Export Manager can describe two quite different roles. In a large organisation, the Export Manager may supervise a department employing specialists in sales, marketing, packing, documentation, shipping, finance and legal matters etc. Much of the manager’s responsibility involves coordinating the work of those departments.
In a smaller company, however, the Export Manager may have to undertake many of these activities personally, calling upon outside specialists and subcontractors when required.
This article concentrates on the second type: the experienced Export Manager who possesses sufficient practical knowledge across multiple disciplines to manage an international transaction from the initial enquiry through to final payment.
The Export Manager — The Ultimate Multitasker
Our Export Manager has to be able to multitask. In fact, few jobs within a company require such a broad understanding of so many different disciplines.
When an export order arrives on the Export Manager’s desk, the first question is not simply, “Can we make it?” It is, “Can we make it, prepare it, document it, ship it and deliver it within the time we have promised?”
That is a very different question.
The first thing to check is the delivery date. Can the product actually be ready for shipment within the required time? That does not mean simply asking Production when it can be manufactured. The Export Manager has to work backwards from the required delivery date and consider everything that has to happen in between.
Are the necessary cartons, cases or pallets available? Does the product require specialist export packing? If timber is being used, does it have to comply with the importing country’s phytosanitary requirements? If a container is required, can one be positioned at the factory at the right time?
Does the product require an export licence or some other authorisation? If inspection is required before shipment, can the inspection company attend when needed? Are certificates required, and how long will they take to obtain? Then there is transport.
Is there a suitable vessel leaving a UK port in time to meet the contractual delivery requirement? How frequently does the service operate? When is the cargo cut-off? How long must be allowed to transport the goods from the factory to the port? If the shipment misses the intended vessel, will the next sailing be a few days later or several weeks later?
Production itself may depend upon components bought from outside suppliers. Can those suppliers meet the timetable? There must still be sufficient time afterwards for assembly, testing, inspection, packing and transport.
There may be another apparently small requirement which suddenly becomes critical. Does the equipment require operating instructions in the language of the destination country? Who will translate them? Who will check the technical terminology? Who will print them, and can that be completed before the goods are packed?
The Export Manager may need to resolve all these considerations before safely accepting the order and authorising production.
Managing the Outside Specialists
Much of the physical work involved in exporting can, of course, be subcontracted.
A good freight forwarder can be invaluable. The forwarder may arrange for a container to arrive at the company’s premises, organise specialist packing or consolidation, book space on the vessel, arrange transport to the port and submit the export declaration using information supplied by the exporter.
Alternatively, the exporter may choose to control more of the process internally.
The work might therefore be divided between a packing company, haulier, freight forwarder, shipping line, airline, consolidator and customs broker.
But subcontracting a task does not remove the Export Manager’s responsibility for understanding it.
Someone still has to make certain that all those separate activities fit together. A container arriving on Tuesday is of little use if Production does not finish until Thursday. A vessel booking is worthless if an inspection certificate cannot be obtained before the cargo cut-off. Perfectly manufactured goods sitting on the factory floor because an export licence has not arrived are not an export.
The Export Manager therefore needs to understand not only what each specialist does, but also when they need to do it and what information they require.
The Work Started Before the Order Arrived
Of course, the export process may have begun months or even years before an order finally appeared.
There may already be an overseas agent, stockist or distributor involved. Someone had to identify that partner, investigate them, negotiate their territory, commission, responsibilities and performance requirements, and establish the agreement under which they operate.
For many SMEs there is no in-house international legal department to deal with this. The Export Manager may therefore need to work with an outside solicitor.
But another question immediately arises: does that solicitor understand the particular overseas market?
A standard agency, distributorship or licensing agreement taken from a computer may provide a useful starting point, but international agreements are rarely a case of one document fitting every country. Local laws concerning commercial agencies, termination, compensation, registration, intellectual property, taxation and licensing can be very different. I learnt that lesson particularly clearly in South Korea.
Over the years I have been involved in establishing agents, stockist/distributors and manufacturing licensees in more than 40 countries. When we were setting up our first Korean manufacturing licence, the group’s lawyers produced their version of a licensing agreement. It was clearly a general document rather than one specifically designed for Korea.
I therefore sought a draft agreement in Seoul. Rather surprisingly, the Korean office of a British law firm produced virtually the same type of general draft.
I knew that this would not solve the problem, so I investigated further. Eventually I found that the Korean authorities had published model forms covering agency, distributorship and manufacturing-under-licence arrangements.
We were then able to combine the requirements of the Korean authorities with the commercial and legal protections we required, including retaining UK jurisdiction where acceptable. The result was an agreement acceptable to the licensee, the Korean authorities and ourselves.
The lesson was simple: international agreements can take time, and local requirements cannot safely be assumed from a standard domestic precedent.
Then Comes the Documentation
Once the goods are produced, inspected, packed and dispatched, another part of the Export Manager’s job begins. Documents produced by outside organisations have to be collected. Depending upon the transaction, these might include bills of lading, air waybills, certificates of origin, inspection certificates, insurance documents or other certificates demanded by the customer, the importing country or the terms of payment.
At the same time, the exporter has to produce its own documents: commercial invoices, packing lists, drafts or bills of exchange where required, declarations and any other documents stipulated by the contract or letter of credit. Those documents do not exist independently of one another. They must tell the same story.
Names, addresses, product descriptions, quantities, shipping marks, dates and weights may have to correspond across several documents. Under a documentary letter of credit, apparently minor discrepancies can delay or even jeopardise payment.
One practical tip I learnt many years ago remains worth remembering: if payment is by letter of credit, check that the weights appearing throughout the documents are consistent with the shipping documents.
The Export Manager is therefore not merely preparing paperwork. The documents are the commercial evidence that the company has performed what it contracted to do and, in many transactions, they are the documents upon which payment depends.
One Job — Many Disciplines
Consider the range of knowledge that may be involved in handling just one export order.
The Export Manager may need an understanding of sales and marketing, contracts, Incoterms, pricing, production, purchasing, packing, dangerous goods, export controls, customs procedures, tariff classification, freight forwarding, shipping, airfreight, insurance, documentation, letters of credit, foreign exchange, agents and distributors, licensing, intellectual property, taxation and the regulations of the importing country.
Nobody needs to be the world’s leading specialist in every one of those subjects.
But somebody within the company needs to understand how they fit together.
That is the distinction which is sometimes overlooked when discussing international trade expertise. A banker may be an expert in documentary credits. A customs broker may be an expert in customs declarations. A freight forwarder may be an expert in international transport. A lawyer may be an expert in contracts.
Each can provide extremely valuable specialist knowledge.
The Export Manager, however, has to understand enough about all of them to recognise when their expertise is required, to give them the correct information, to question something that does not look right and, most importantly, to make sure that all the individual parts of the transaction work together.
That breadth of knowledge is difficult to acquire from any single course or qualification. Much of it comes from repeatedly handling real transactions and discovering how a decision made in one part of the process affects another.
A change in packing can alter freight costs. A change in delivery date can affect the vessel booking. A different Incoterm can change responsibilities for transport, insurance and customs clearance. A letter-of-credit condition can affect the documents required from the shipping line. A seemingly harmless amendment to a product description can create a customs or documentary problem.
International trade is a chain, and the Export Manager needs to understand the whole chain rather than just one link.
Responsibility Ends with Payment
Perhaps the most important point is that the Export Manager’s responsibility does not end when the goods leave the factory.
Nor does it necessarily end when the ship sails, when the aircraft takes off or even when the goods arrive at the customer’s premises.
The shipment has to comply with the contract. The documents have to be correct. Any queries or discrepancies have to be resolved. Claims may have to be handled. The agent or distributor may need support. And, above everything else, the company has to be paid.
An export is not successfully completed simply because the goods have been shipped.
The Export Manager’s responsibility ends when the transaction has been completed and the money is safely in the bank. That is why the experienced Export Manager is not simply a salesperson, shipping clerk, customs specialist or administrator.
He or she is the person who understands how the entire international trade process fits together — and makes sure that it does.