How to Find and Build Business Contacts Internationally

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Welcome back to our last installation of the International Marketing Channels blog!

Today we will discuss how to build and retain professional business relationships with partners abroad. Hopefully, this will serve as a quick go to guide when thinking about building contacts abroad. This information will be based on internet research and will provide advice from different sources and organizations. This is mostly suitable for businesses in the United States but should be similar in other countries.

According to Entrepreneur.com:

  • Contact your states Commerce Department which should offer import/export assistance
  • Use a sourcing agent
  • examine industry research through the Federation of International Trade Associations (FITA) and trade groups specific to your industry

FITA has comprehensive business directories on many source countries, while the Export-Import Bank now offers larger capital loans for small global traders. The U.S. Commercial Service’s Gold Key Matching Service introduces entrepreneurs to U.S. embassy officials overseas, who then introduce Americans to local suppliers.

Some other good sources are:

  • Trade Information Center (TIC) at the U.S. Department of Commerce
  • export training at Export Small Business Development Centers
  • Directories of overseas buyers can be found at www.export.gov and www.buyusa.com , two websites sponsored by the U.S. Commerce Department.
  • Another good site is the U.S. Export Institute’s site
  •  You can also find partners in a particular country by calling or e-mailing the U.S. Embassy there.

Remember that caution should be taking when dealing with international partners and meeting in person is always recommended.

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Railroad Transportation (of Energy) in Russia

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Hi again,

      Welcome to our second to last installment in this exciting Marketing Channels blog which deals with the Global Market! Today we will discuss Russia. Considered as part of the BRICS economies and certainly making headlines frequently Russia is located between emerging Asia, the troubled Middle East, and mixed Western Europe. Below is a map which includes the Russian railroads.

Railroads in Russia

This map is interesting for several reasons. First, you can see the extent to which Russia approximates the Nordic countries, western European countries, eastern European countries, middle eastern countries, China, and Alaska. In addition, it helps to think about these as either oil producing (such as Norway and Alaska) or oil buying countries as most of the rest are. The Railroads mostly help to transport oil and gas through western Europe which is densely populated. Some railroads also lead to China.

It is important to remember that most of Russia’s revenue is from energy (around 68%). Currently, Russia was in the process of building an oil pipeline to southeastern Europe but instead redirected it to Turkey due to tensions with the west.  According to the US Energy Information Administration:

Russia is the second-largest producer of dry natural gas and third-largest liquid fuels producer in the world. Despite its significant reserves of coal, it produces only modest amount of coal. Russia’s economy is highly dependent on its hydrocarbons, and oil and gas revenues account for more than 50% of the federal budget revenues.

This is important for two reasons.

First, all of this information is important for business that rely heavily on energy. Energy intensive businesses would probably benefit from the proximity to Russia or one of its railroads. This includes businesses anywhere on the supply chain; from manufacturers of oil extraction machinery to refinery of oil to auto makers and producers of petroleum based products.

Second, businesses probably would not want to invest in Russia unless it is oil related. We have seen that Russia has been expropriating companies such as McDonald’s due to political tensions. Russia’s economy is also too dependent on energy so unless a company is in that industry they should not expose themselves to such risk unnecessarily.

But, if we have learned anything it is that where there are risks there is opportunity. In the future, when clean energy grabs hold of market share and climate change warms the north these railroads might provide transportation to numerous different industries from China to the rest of world. Or who knows, maybe Russia might still become a superpower.

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Consumer Preference in Asia Pacific – Online Shopping vs. In – Store

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Hello,

Thank you for your continued support and for reading our blog!

Today we would like to discuss e-commerce in Asia-Pacific. This is important because as companies look to expand for growth, China and India are the two largest markets in the world. Combined they represent greater than 2 Billion people and more than 30% of the world’s population. In addition, sales increasingly occur online; especially in developing countries where the percentage of connected consumers is growing substantially.

 

Asia

Total online retail revenues in 2012 was $ 156 billion in Asia- Pacific. The apparel, accessories, and footwear segment are the fastest growing. The electronics segment enjoyed revenues of $ 30.7 Billion. Each segment accounts for about 20% of total revenues. Much of the growth comes from China, Japan, and South Korea. Much potential is expected from India in the future.

Total revenues are expected to keep growing at a diminishing rate with expected total revenue of $394.5 billion in 2017. Although there exists strong rivalry from low switching costs and many players the growth alleviates the competition. Asian internet penetration was just 27.5% in 2012. Security is a big factor in choosing online retailers and practicing loyalty. Increasing ease of use and search has increased price competition. All in all there are few barriers to entry due to low fixed costs, little regulation, and easy access to suppliers. Large retailers are mainly undifferentiated while smaller companies cater to niche groups.

Main Asia-Pacific players include:

  1. Alibaba
  2. Amazon
  3. Apple
  4. Rakuten

As you might know the founder the founder of Alibaba is now the richest man in Asia. The IPO valuation of the company speaks to the expected growth of the market. With increases in cell phone usage, internet connectivity, and wealth in Asia online shopping will surely increase its presence in the marketplace.

I hope this blog has served as a crash course in e-commerce in Asia-Pacific. The take away is potential, growth, and speed to market. All of this data was found in the market service Marketline Advantage.

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International Market Transportation Methods

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Good Afternoon All,

Welcome back to Chris and Gerald’s blog.

Today we’ll be talking about the different modes of transport found throughout the business world from the perspective of the largest exporter in the world. The transportation methods that are used include: Rail, Truck, Water, and Air. The decision of which method to use is very important to business executives as each method has their own pros and cons. This decision is also important when it comes to the type of good and how urgently the good needs to be transported.

The first method used by businesses are trucks. Trucks are one of the most commonly used transportation. Trucks are good transportation method for goods as they can be brought directly towards the customer place of business, or residence, whereas all other forms of business are limited in that respect and truck is also very fast though speed does tend to decline, once the truck leaves an industrialized area. The con of transport goods by truck is that it can be very expensive to transport goods especially depending on the type of good. For example, someone would find it very costly regardless of country, if a coal company or someone requiring coal were to try and ship the same amount of coal that a train can by truck, the company would be looking at using several hundred trucks to make the same delivery that one train can.
driving-moving-trucks-1

The second method of transporting goods found throughout countries world wide is by rail. Rail is one the most popular options when it comes to transporting goods in bulk across very large distances, an example of a good commonly transported by train is the coal, which was mentioned earlier. Though in the world that has the global market, trains are somewhat limited in terms of moving from continent to continent, but are still used quite commonly as it is a part of inter-modal transportation for company. Trains are usually the first step in bringing its goods to a port, and because it is only part of the process. Trains transport their goods in containers that are easily transported from the train itself to the next transportation method. A business would use a train because they can be cheaper, and more energy efficient than other transportation methods which is important if you are transporting goods long distances.

Train

The third transportation method that is perhaps used the most when it comes to exporting goods internationally, is shipping by water. If the business needs to ship a lot of items in bulk and there is really no time sensitivity to the items then shipping it, then transportation via the sea really is the best option. In fact, shipping via the ocean is used so much that there are now several different types of cargo ships used to transport goods, depending on whether they are bulk commodities, dry goods, perishable items, and liquids. Ships are an integral part of intermodal transportation, as they usually receive their containers from the trains themselves, and are then brought to the country where the delivery is to take place. Transit time ultimately depends on where port A and port B are. An example of this is, transporting containers via ship from a  United States port to a European port will typically take anywhere between ten to twelve days, assuming there are no storms or similar delaying conditions. So transporting by ships, is usually the slowest method, but the most economically viable option for bulk, non perishable commodity goods needing to go from continent to continent.

Line0534

The final transportation method used by international businesses is shipping goods by air. Using a plane is ultimately the fastest options, but is generally reserved for the most time-sensitive goods and orders. Other advantages to such a method include cheaper warehousing costs, reduced insurance rates, and much better control over inventory. The biggest con to air travel is that it can be very expensive, as the price for air freights depends on how heavy the shipment is, and how fast you want it to get to its destination. Heavy goods, that need to be transported very quickly will be the most costly. One other limitation commonly found when using air transport especially when transporting to underdeveloped countries is that air travel is limited by whether or not there is an airport of some kind.

Plane

Choosing a transportation method is very important when it comes to international business, which is why all businesses need to take some serious time to consider how their goods are transported. If you have bulk items that need to be transported across country lines, then trains or trucks are probably the best way. If their is no rush for goods to be transported then going by ocean would be the best option. And if your goods need to get to their destination as quickly as possible, planes are definitely the way to go. Well that concludes this look into the four different transportation methods when it comes to international marketing channels.

Stay tuned for our other blog posts.

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Global Marketing Channels and Diamonds

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Good Afternoon all,

Welcome back to Chris and Gerald’s International Marketing blog. We’ve got something special for all of you, but especially for those ladies interested in …

No we aren’t giving you any diamonds, but we are going to be sharing a story about the evolution of a very prominent diamond company and its marketing channels and supply chain.

The company that we are talking about is called De Beers Consolidated Mines and for many years this company managed the entire global diamond industry, until the beginning of the 20th century, when other firms were starting to appear and threaten their position in the market. De Beers then had a dilemma to deal with. How would they go about stabilizing their position in the market given all of these new competitors?

De Beers then hired a consulting firm, and the answer they came up with was to start stockpiling most of the diamonds that they were mining. This was beneficial to De Beers for a couple of different reasons. The first being that because of all this stockpiling, it allowed De Beers to stabilize their prices for quite some time. It also had the same effect on De Beer’s competitors, allowing for a stabilized price for the entire industry. Through this process De Beers was able to make sure that its mines were maximizing their profits as well. Another way the stockpiling of diamonds was beneficial to De Beers was that they used them to punish insubordinate mines, or mines that tried to cut De Beers out of their strategy by selling directly to wholesalers or cutters. The way it worked was that when a mine tried to leave, De Beers would start selling massive amounts of the same type of diamonds in order to keep them from making any profit. This was especially important to De Beers because if the mines disappeared from their supply chains, or marketing channels then their company would start to do very poorly as they would have a hard time finding diamonds after their stock pile runs out.

You see everyone; De Beers marketing channels works like this. De Beer owns many mines from all over the world, they even had to make an exclusive deal once with the Soviet government in order to gain the rights to mine in Siberia for diamonds. De Beer’s mines would sell their collect their goods into a stockpile, and then sell them at a 25 percent markup to a CSO grader. This CSO grader is very important to the process, as without the guarantee of a CSO, wholesales would have a hard time finding a buyer for the pressurized carbon. After the diamond was given its grade, it is sold to a wholesaler. The wholesaler finds a Cutter/Polisher to fine tune the diamond so that the consumer would buy it. Then its sold to another wholesaler and then finally it makes it way to the jewelry makers and retailers all over the world, not just in the United States. The reason for this was demand for diamonds wasn’t just restricted to the United States but found all throughout the world, so De Beers made it their business to find out how best to get their diamonds from one end of their supply chain to the other, even if that meant the diamonds would be shipped all around the world. This marketing channel was so useful to De Beers that back at the beginning of the 20th century; they had control of over 80 percent supply of rough stones. However, all of that changed as competitors gained new and improved value chains.

In order to thrive De Beers had to come up with a new strategy. The first part of the strategy involved getting the help of Bain and Company Consultants. With their help, De Beers set out to create a new vertical monopoly, one that stretches from the bottom of their deepest mines all the way to the retail stores that sell their goods. The plan consisted of several parts. The first part would be to end the stockpiling of diamonds. By doing this, it freed a lot of money, which they would then use for marketing. The second part of the new strategy was to implement a new “supplier of choice” program, where De Beers would decrease the number of wholesalers they did business with. The remaining wholesalers were expected to give greater disclosure of their operations. The final part of their strategy is that they change their priority to marketing and retailing De Beers’ diamonds as a luxury item. This strategy seemed to be successful as their sales went from 5.87 billion in 2010 to 7.37 billion in 2011. However, through all of this, without the supply chain and global marketing channels De Beers would not be able to succeed as well as it has been. So it needs to bring some attention to how they might make the marketing channels more efficient and streamlined.

With that, comes the end of our blog post. I hope you all enjoyed learning more about one of the most profitable diamond companies out there. Join Chris and Gerald next time as we discuss another topic involving global marketing channels.

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