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Developing export managers: DeCTA's approach.


The Developing Countries Trade Agency (DeCTA) is the trade promotion arm of the United Kingdom's technical cooperation programme for developing countries. Its principal aim is to promote commerce and help developing countries to improve their economic development by increased exports, especially to the United Kingdom. The Agency is therefore the U.K. import promotion office.

One of the ways in which DeCTA is asked to promote developing country exports is by arranging and presenting training courses, either alone or in collaboration with other institutions. The reasoning behind this is quite simply that non-traditional exports can be promoted only if the exporters concerned understand the practice of international trade and can undertake it efficiently.

An examination of any single contract of export sale indicates that many complex areas of commercial operations have to be fully understood by exporters for their trading to be successful. Education is required for all those involved in the export process: staff in company management, sales and administration. It entails long-term professional study.

The DeCTA approach

The fundamental requirements in any educational activity are to assess what subjects should be taught and to identify the participants who need to acquire specific knowledge and skills. The object of the exercise is to create a situation in which the commercial operation is undertaken with optimum efficiency at both the macro- and micro-economic levels. In the case of DeCTA's educational activities, these elements are related to the export performance of developing countries and companies within these countries, particularly as far as nontraditional exports are concerned.

The subjects: Export efficiency, in its simplest descriptive form, is the supply of the right goods at the right price at the right time to the right place. In a foreign trade transaction the supplier will, by definition, be in one country operating under one legal system and the buyer in a different country operating under that country' own -- different -- legal system.

DeCTA's approach in its courses is to analyze an international sales contract and break it down into its constituent parts. In doing this it is essential to understand that the only practical definition of "marketing" is the entire business situation from drawing board (product adaptation for the target market) to after-sales service (post delivery and a satisfied customer).

This analysis results in the following subject areas for DeCTA's courses: export market research (to provide the right product); export distribution and promotion (to sell such a product according to customary commercial practices in the marketplace); export management accounting (to cost, price and manage for maximum profits); elements of export law (to ensure contractual relationships with buyers); export documentation and international transport (for efficient paperwork and movement of goods); export finance (to comprehend methods of payment; finance of production, management of exchange risks and credit insurance); cargo insurance (to indemnify the export company against transport risks that can be covered in the marine insurance market); and, finally, international trade law (to understand how concepts of export law relate to transport, insurance, finance, sales, product liability and so on). These eight subjects are the vital constituent parts of export education.

The participants: Identifying the participants in DeCTA's programme is particularly important. Too often training focuses on export promotion and export development in the national or macro-economic sense. This is, without doubt, a very important aspect for improved international trading. What has been either forgotten or minimalized in such an approach, however, is how the trade brought about by export promotion and export development can be successfully exported by the exporting company, i.e., the all-important area of "export practice." Frequently export practice is written off as "just the mechanics of international trade," or the practitioners are considered as "shipping clerks." In my view, this is not correct. Export practice covers international trade from product adaptation through to repeat orders and needs to be carried out by professionals adequately educated for that purpose.

Why professionals? Examples of professional areas of international trade are finance, insurance, transport, law, research, distribution, promotion and management accounting. In their individual occupations, bankers, insurance brokers and/or underwriters, shipowners and air carriers, lawyers, researchers and managers all regard themselves as professionals. If that is so, it necessarily follows that international traders who have to be educated in all such activities, rather than just one, must be professional people.

Who then are the participants in DeCTA's courses? In the profession of exporting, three distinct employment categories are discernible: export managers, export sales staff and export office practitioners. All have to be educated in all subject areas of the export contract and take part in DeCTA's educational activities:

* The export office practitioner. This person undertakes transport, arranges insurance, obtains payment, prepares all documentation and works in close cooperation continuously with his or her export sales department.

* Export sales staff. They travel throughout the world acting as their companies' ambassadors and have to be in a position to discuss product adaptation, prices, credit, methods of payment, terms of delivery, risk coverage, international transport, contractual relations with customers and so forth.

* Export managers. They are responsible to their boards of directors for the entire coverage of the company's export performance.

These three groups of participants in DeCTA's courses all require complete coverage of the export syllabus. It is only when they are educated to a professional level that they can operate at a high level of efficiency, which will then be reflected collectively at the national level.

A long-term programme: Professional international traders need to be educated in the complete export situation. In DeCTA's view, short courses, seminars or workshops are not the best approach to producing efficient export staff. DeCTA's approach is that international trade education must be ongoing, teaching all aspects of the subject in an interrelated fashion and associated with day-to-day practical experience in exporting. This produces the complete trader.

Focus on the practical

DeCTA's training activities are based on a system of long-term international trade education that is introduced into developing countries' educational systems. The DeCTA method, which has been tried in one country and found to work well, is to introduce day-release courses into polytechnics or universities. The introduction of a long-term programme has to be carefully controlled. Courses must focus on the practical aspects of conducting business. When participants complete their courses and obtain employment with export companies, they must understand not only the risks involved in trading in foreign currencies but also how the forward market operates. They should be familiar not only with the methods for making payments but also understand the practicalities of bills of exchange and documentary credits.

In addition to knowing the methods of international transport, they should understand the practical problems of the carriage of goods internationally, documentation required (all-important in export trading), liabilities of carriers to shippers, delivery terms and how freight rates are assessed.

Concerning foreign trade contracts, they should have a precise knowledge of what has to be incorporated into such contracts; how risk and ownership are transferred from one party to another in international trade; exactly when goods are to be delivered; when a contract is deemed frustrated; what force majeure is; and so forth.

Examples of other important aspects of an international programme for potential export managers are the practical differences between agents and distributors; what protection exists against goods not being claimed in the importing country; the significance of "utmost good faith" in cargo insurance; the differences between arbitration and litigation; how "consignment trading" works; and so on.

In summary, participants need to be exposed to the practical side of trading, which is the focus of DeCTA's approach.

Introduction into a developing country

DeCTA's approach is that of long-term training, rather than short courses or seminars. The reason for this is to provide an all-embracing, problem-solving understanding of international trade. The long-term educational programme that DeCTA has developed can be introduced into universities or polytechnics on a "day-release" basis. Under this approach, it is recommended that courses extend over two-year periods with export staff of international trading companies attending one day per week (on the basis of a 30-week academic year). A "day-release" type of course is suggested so that participants can study international trading while actually working in international trade. This provides theory and practice concurrently. The content of the course syllabus must, however, be predominantly of practical content in order to be of value to such participants.

This concept was introduced into the University of Nairobi several years ago, and it worked exceedingly well for a number of years. This form of practical export education provided over a two-year period while participants work in international trade jobs is the basis of the education introduced into the United Kingdom by its Institute of Export. The education is provided as evening studies, but the scheme operates similarly to that recommended above. It works well, and successful participants are permitted to place appropriate letters after their names as evidence of professional accomplishment and suitability for employment as export executives.

Courses under this concept of long-term education combined with practical experience can, of course, be introduced in a number of ways. There is considerable elasticity in administration. The one-day-per-week option over two academic years has been suggested, but "sandwich" courses could be introduced instead where university or polytechnic attendance is made difficult by travel, or, eventually, professional distance-learning arrangements.

DeCTA support

The Developing Countries Trade Agency can support in two ways developing countries intending to introduce long-term international trade education of the type described here. First, DeCTA has produced a syllabus for such a programme, which can be provided. Second, if interested developing countries required a DeCTA executive to visit for a short while to explain the syllabus and assist with its introduction, this could probably be arranged, provided that appropriate funding could be found.

The syllabus: The subjects identified by DeCTA for its syllabus, after an analysis of international sales contracts, are:

1. Market research.

2. Export distribution and promotion.

3. Export documentation and international transport.

4. Cargo insurance.

5. Export finance and credit insurance.

6. Elements of export law.

7. International trade law.

8. Export management accounting.

Four of the subjects relate to export practice in the country of export, and four to work in export markets.

Work in the office: This section, which constitutes year one of the DeCTA course, consists of the study of: export finance and credit insurance, cargo insurance, export documentation and international transport, and elements of export law. Each subject is divisible into 30 X 1 1/2-hour lectures. Four lectures, i.e., six hours of teaching, should be provided to make one full day at the university or polytechnic.

Work in the field: This section of the syllabus, which constitutes year two of the course, covers the following subjects: channels of distribution, market research and promotion, international trade law and export management accounting. The last-named subject is included within this section as, inter alia, it considers prices and maximization of profits in export markets. Once again, each subject is divisible into 30 X 1 1/2-hour lectures, with four lectures provided to make one full day at the university or polytechnic.

The teaching methodology can be adjusted to the requirements of the educational institution and the availability of resources. The use of case studies; discussion of student experience; visits to ports, airports, the customs authority, forwarding agents; and so on, can all vary the classroom lecturing process.

Reasons for a common syllabus: The DeCTA syllabus is one that can be used in any country provided that it is adjusted on the spot to conform with local legislation and practice. These adjustments can obviously be made only by national teaching authorities prior to course instruction. The recommendation of a common syllabus is based on the fact that so many aspects of export and import trading are virtually the same the world over. Examples of this are as follows:

-- Export finance: There are virtually only four ways of being paid in financial terms for exports: cash with order, open account trading, bills of exchange and bankers' documentary credits. Cash with order and open account trading operate on similar principles worldwide. Bills of exchange operations are controlled in many countries by the International Chamber of Commerce's "Uniform Rules of Collections" (ICC brochure no. 322). Bankers' documentary credits are issued internationally subject to the "Uniform Customs and Practice for Documentary Credits" (1983 Revision -- ICC brochure no. 400). -- Export documentation: Documents in international trade are similar regardless of nationalities of contract principals: various forms of invoices and certificates; insurance policies; certificates and cover notes; bills of lading; charter-parties; waybills and consignment notes; packing lists; postal documents; customs entries; shipping notes and dangerous goods notes; and so on. -- International transport: The rights of shippers are protected by national legislation that usually, however, incorporates agreed international conventions such as the Hague-Visby or Hamburg Rules (shipping) and the Warsaw Convention (aviation).

-- Elements of export law and international trade law: Whereas the type of law might well differ from country to country (common law or Roman law, for example), legal aspects of international sales are frequently comparable (deliveries, finance and so forth), and those aspects are emphasized with advice to take into consideration local legislation.

-- Channels of distribution: Contacts between exporters and customers are made universally by a few main types of intermediaries, such as export sales staff, agents, distributors, merchants and confirming houses.

-- Research and promotion: A common base for all export research relates to ascertaining what the customer in the export market requires in terms of price, product, presentation, competition, local custom and so on. Promotional possibilities have a similarity in many markets.

-- Export management accounting: This covers pricing, profitability, budgeting and so on.

Local contribution

Because DeCTA's syllabus described above relates to the practical aspects of international trading, considerable contributions are essential from local service industries. Service industries have constantly to keep up to date in the services they provide, so they will always be able to teach up-to-the-minute situations in their subjects. This applies to: (a) lectures from the foreign banking community for the subjects of export finance and credit insurance; (b) lectures from transport companies or freight forwarders for courses on international transport; (c) lecturers from the customs authority or freight forwarders for the topic of documentation; and (d) lecturers from marine insurance companies for classes on cargo insurance.

For the subjects of export market research and export distribution and promotion, trainers should be sought from among major local international traders or the marketing faculties of the universities or polytechnics.

For the two law subjects and for export management accounting, professional lecturers should be forthcoming from the legal faculties and/or management divisions of the universities or polytechnics concerned.

Although lecturers from the export service sector may not be as professional in classroom communications techniques as qualified teachers, they should be able to put their subjects over well through enthusiasm and full knowledge of the subject matter. Any existing professional institute of marketing or management could also be a source of part-time lecturers, provided that lecturers selected are actually working in the area concerned.

Problems to be overcome

The DeCTA common syllabus provides subject syllabi, aims and objectives in teaching them, teaching guidelines, suggested reading lists, specimen examination papers and marking schedules. The document presents one or two problems to be overcome locally:

1. The basic problem in using the syllabus is to get the universities or polytechnics to accept part-time lecturers from the service sector. This is naturally more of a problem for the universities because of their academic approach. Polytechnics are accustomed to professional and vocational education.

2. The common syllabus recommends reading material. As the document is in English, so is the recommended reading. Teaching institutions in non-anglophone countries will need alternative reading material in their respective languages.

3. As already stated, the syllabus needs to be adjusted to local legislation and customs.

Potential export executives

In practice DeCTA has found that up to 30 participants can be taught along these lines at any one time. This means that 30 potential export executives can be trained by each teaching institution at the end of the first two years, and 30 more can be taught each year afterwards. This would result in 300 professionally educated export managers in a country adopting the DeCTA system in only one teaching institutions after 11 years.

Future developments

The practice of international trade is dynamic. Procedural requirements frequently change, and internationally accepted conventions alter periodically. Future development of the DeCTA approach need mean only that teaching institutions in concert with their faculties and lecturers from the service sector continuously update the syllabus in accordance with commercial practice.

PHOTO : Courses in the programme focus on the practical aspects of conducting business.

PHOTO : Lecturers from the local service sector can present the current situation in their areas.

Arthur J. Day is Managing Director of the Developing Countries Trade Agency (DeCTA) in London. Before joining DeCTA he was Director-General of the Institute of Export in the United Kingdom for ten years, Chief Executive of the London World Trade Centre for a short period and an international trade journalist for over twenty years. He has also undertaken technical cooperation assignments in export promotion in developing countries. Mr. Day is the author of several well known books on exporting, plus a number of articles on the subject.
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Title Annotation:Developing Countries Trade Agency
Author:Day, Arthur J.
Publication:International Trade Forum
Date:Oct 1, 1990
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