Least developed countries: basic information for export marketing.
Exporters in least developed countries entering foreign markets often need basic information on how to carry out their international marketing activities in order to benefit fully from sales opportunities. This includes knowledge of such aspects as promotional methods, marketing intermediaries, sales terms and conditions, contractual matters and shipping procedures, among others. Some points that are of particular importance to new exporters in least developed countries selling to the French market are reviewed below.
Before trying to sell their products in France, exporters in least developed countries should get as much detailed information as possible about the sales potential for them. In brief, this means deciding whether the product has a chance of succeeding in the French market. Exporters should take advantage of documentation that is available. Information can be provided by local trade organizations, various economic cooperation institutions and the French Chamber of Commerce, or a joint Franco-national chamber if one exists. The office that the French Government has set up to promote exports from least developed countries into France, PROMEX-PMA, also has information available for this purpose (address: 10 Avenue d'Iena, 75016 Paris).
One of the first steps that exporters in least developed countries should take in approaching the French market is to prepare promotional material introducing their product and company. Such material is relatively easy to produce. This means of promotion is well suited to business firms in least developed countries because it is inexpensive compared with other promotional methods.
If an exporter's funds are limited, a single promotional piece will be sufficient, with a current price list attached. It is better however to have several types of material, such as a small brochure introducing the company, a separate leaflet about each type of product, a catalogue showing all of the company's exportable products and a price list that is separate so that it can be updated easily.
The content of these documents should be carefully prepared so that it represents the company fully and accurately. The material should be written in French.
The box on page 10 lists the types of information that should be included in sales literature prepared for the French market to promote a particular company and its products. Some of the items may not be suited to every situation. An exporter should choose those most appropriate for the given company and product(s).
Trade fairs and shows
Direct contact frequently offers the best opportunity to conclude business deals in France. Trade fairs and shows, which provide this possibility, are one of the oldest sales promotion techniques in France. A large number of major international trade fairs and shows are held in the country. It is particularly important to choose the right fair. An exporter from a least developed country may participate as an exhibitor or simply as a visitor. The opportunity to meet a large number of customers in a short time is obviously worthwhile. Even as a visitor, an exporter can make contact with potential representatives and customers among the exhibitors.
Before participating in such an event, an exporter should undertake careful preparations. A poorly planned operation will not be profitable and will discourage the exporter from any further involvement in such events.
An export company may decide to show its products jointly with others from the same country in a group stand. In this case, much of the preparation is assumed by the country's national organizing body, and the cost to each exhibitor is much lower than for an individual stand.
To find out how to participate in a particular fair or show, exporters should contact the event's organizers. The conditions of participation include mainly the cost of the stand, the installation requirements and the schedule for completing preparations. Information will also be needed about shipping products to be displayed.
An exporter should establish a budget and timetable in accordance with the information provided by the event's organizers. It may be necessary for one or more representatives of the company to be present at the stand, and account should be taken of the effect that this will have on the firm's regular operations.
The products shown should be available and ready for marketing. Some adaptations may be required to make them suitable for sale in France, particularly with respect to packaging and labelling (French clothing sizes, for example).
A key factor in the success of participation in a trade fair is the follow-up work. Exporters should keep a record of the visitors met, and maintain contact by promptly sending them the information and documents that they requested.
(For more information on trade fairs contact PROMEX-PMA.)
A business trip, like a trade fair, requires thorough preparation. An exporter from a least developed country should establish precise objectives for the visit and prepare promotional material accordingly. Before the trip the exporter may find it helpful to contact the French Embassy or trade delegation in his or her country (or chamber of commerce, if there is one) as well as the exporting country's trade representatives in France.
It is important to choose an appropriate time of year for the trip. Meeting dates should be fixed in advance. Appointments made ahead of time should be confirmed upon arrival in the country. After the trip it is essential to follow up with the contacts made during the mission.
If exporters can afford to do so, they may decide to arrange advertising to publicize their companies and products, in addition to the promotional means mentioned above. Many sales, industrial and trade publications exist in France, in every industrial and trade sector and for every stage of the production and distribution process. An exporter can find out about these by consulting business directories that list trade publications. The various trade federations can be contacted for more information, through the French business owner's organization (Conseil National du Patronat Francais or CNPF) (address: 31 Avenue Pierre [I.sup.er] de Serbie, 75016 Paris).
The selling price
One of the steps in preparing to promote a product in the French market is deciding on the price to be charged to the importer or buyer. In setting a selling price an exporter must take into consideration not only the production cost but also the extra costs involved in exporting. It is important to obtain information on the usual prices in France for the line of goods concerned when determining the export price.
Some technical changes may be required in an exporter's product to comply with French regulations and standards. In addition, the packaging and labelling must conform to French requirements. These factors may entail added costs that must be calculated in the price.
Account must also be taken of the costs of shipping, insurance and customs duties. The sales contract should specify who is to pay these costs. If it is the exporter, these should also come into the price calculation.
Means of payment
Exporters to France have the choice of invoicing their goods in their country's own currency or in French francs. If they bill in their own currency, the importer has to assume any exchange risks. Various means of payment can be used.
Payment in cash for commercial transactions is allowed for invoices under FF 5,000. Payment by cheque is a relatively slow way to transfer funds. Postal transfer or an international postal money order may be used if the exporting country's regulations so allow.
Another method is a bank transfer, which is effected by giving an order to a bank to debit or credit one or more accounts. The order is sent from one bank to another. This payment instrument is generally faster than those mentioned above. The order can be given in several ways, including by mail, telex and the "SWIFT" network (Society of Worldwide Interbank Financial Telecommunications). The SWIFT system, which is inexpensive, fast and reliable, works through a private electronic network set up among member banks. In countries not connected to this network, an exporter should seek information about how to get access to it.
Commercial bills of exchange are another method of payment. A bill of exchange is a deferred payment instrument, that is, the importer signs a document promising to pay a certain sum at a later date, called the due date. Different kinds of bills of exchange exist, including a letter of exchange (issued by the exporter and sent to the importer, who signs acceptance of it), and a promissory note (issued by the importer, who undertakes to pay the exporter on the due date). A commercial bill of exchange offers the advantage of being a negotiable instrument (saleable at a discount) that can be cashed in at the bank if the beneficiary (the exporter, in this case) needs the money before the due date.
Security of payment:
Several types of guarantee are customarily used in export operations towards France. One is the delivery of merchandise against a promise of payment. Another is delivery of merchandise in return for payment on receipt, under which the merchandise is shipped to a third party who delivers it to the importer only after receiving payment. Under a system involving delivery of the documents in return for payment, an exporter transmits certain documents to a French bank, and the bank delivers the documents to the French importer in exchange for payment of the goods.
Documentary credits is a frequently used procedure that offers a real guarantee against nonpayment. Under this system a French importer asks his or her bank to pay the exporter of the merchandise in exchange for certain specified documents, which the importer then presents to receive the goods.
To sell products in France, exporters in least developed countries usually need to use the services of a marketing intermediary. The intermediary buys the exporter's products and distributes them in France, either directly of through a third party.
The main kinds of sales intermediaries are import agents, commission agents, export agents, export management companies, group buyers and international trading companies.
Import agents operate on their own behalf or on that of their company. Such agents are French citizens.
Using an import agent has several advantages for an exporter in a least developed country. The exporter can manage everything through a single contact in France. An import agent provides a well established organizational structure and assumes the cost of numerous expenses (such as trade fair participation and production of brochures). The agent has merchandise and equipment available for demonstration to customers. He or she also takes charge of sales management and invoicing for the exporter, and assumes the risks of customer nonpayment.
One of the disadvantages of an import agent is that the agent's services may be quite expensive. It is also difficult to switch agents once the relationship is established. Moreover, an exporter has practically no direct contact with French customers if an import agent is used.
A commission agent operates under the exporter's name. An agent of this type is paid through a commission on sales.
An advantage of this approach is that the commission agent must submit accounts. The exporter maintains control over the selling price and can often achieve a higher margin than with an import agent.
Disadvantages include the fact that inventory costs and other expenses must be assumed by the exporter. In addition, the agent may also represent competing firms.
Operating in the exporter's own country, this type of intermediary buys the merchandise from the producer for export. Such agents work under their own company name and act on behalf of the exporter. The agent does not pay the exporter for the merchandise until payment is received from the foreign customer.
An export agent takes charge of all phases of the export operation, from sales prospecting through receiving payment from the buyer. This method may be advantageous in situations in which export procedures are long and complicated.
A disadvantage is that the exporter has no control over the sales of such an intermediary.
Paid on a commission basis, this type of agent may be required by the exporter to provide a performance bond to ensure proper operation.
Export management company:
An export management company partially or totally replaces a producer's own export department. The company acts on behalf of the exporter, operating under the exporter's name.
An arrangement of this kind may save an exporter considerable money. Specifically, an exporter does not need to set up a special export organization. Moreover, the exporter has constant access to full information on customers, distributors and the nature of sales contracts.
Export management companies usually specialize in a particular type of product, so it is important to choose an appropriate one.
Acting on behalf of a French customer, a buyer studies the market of the supplying country and deals directly with local producers. Paid on a commission basis, the buyer works on behalf of purchasing organizations in France, both public and private.
This type of intermediary has strict requirements in terms of price, quality and respect for delivery dates. After selecting the desired products, such buyers negotiate the terms of sale and take charge of the export procedures.
This is a practical arrangement for small companies in least developed countries with well defined products. Purchases generally involve large quantities. On the other hand, price negotiations are often long and difficult. This method cannot be expected to provide a regular source of export sales. The end-use of the product is entirely beyond the control of the exporter, who must nevertheless provide after-sales service.
International trading company:
In this type of arrangement, an exporter deals with a French company that has its own distribution network abroad. Although the company focuses mainly on selling French products in foreign markets, it can also operate in the other direction, acting as a buyer.
Some companies in least developed countries find it worthwhile to form an association or partnership with others to manage their exports jointly, in order to save on marketing costs. For an arrangement of this kind to succeed it is best if the companies are of similar size and have related but not competing products.
Another type of intermediary is the salaried sales representative, who works only for the exporter. Such representatives conduct market research regularly, sell the products and manage customer follow-up. They are well informed about the products and the companies that they represent. A representative of this type must however have a thorough understanding of the French market to be successful.
A third approach is international mail-order. This method, marketing directly to consumers, should be used cautiously. The product needs to be aimed at a well defined group of consumers with a good understanding of the item being sold. An exporter must therefore be familiar with the needs and expectations of the potential customers and have up-to-date files of these customers' names and addresses. Furthermore the logistics of getting the goods to the market in response to orders must be well organized.
(For more information on marketing intermediaries contact the French Federation of International Trading Companies with Offices Abroad (Chambre Syndicale des Societes de Commerce International Ayant des Bureaux a l'Etranger (SYNCIBE): 31 Avenue Pierre Ier de Serbie, 75784 Paris Cedex 16).
Export sales contract
An export sales contract is the usual conclusion of an international trade operation. The main elements in an international sales contract are the identification of the parties, the purpose of the contract, a description of the product(s), the amount of the sale, dates and conditions of performance, settlement of disputes and cancellation clauses. The language and conditions of the contract should be given careful consideration by the exporter.
An exporter in a least developed country and an importer in France are governed by different legal systems. Some of the terms used in the contract may not have the same meaning or scope in the exporter's country and in France. Many commercial disputes arise because of differing interpretations of clauses in contracts. Assistance from a legal specialist in drawing up a contract may be advisable for exporters new to the international market.
Exporters in least developed countries should familiarize themselves with the standard terms used in the international shipping of merchandise. These are defined in a document called "Incoterms" ("International Commerce Terms"). The terms have been developed by the International Chamber of Commerce (ICC), located in Paris. They are regularly revised; the latest revision was published in 1990. (The Incoterms document is available from the ICC: 38 Cours Albert Ier, 75008 Paris).
The Incoterms constitute a set of international norms, for optional use, that spell out the interpretation of the main terms contained in sales contracts. Their use helps prevent misunderstandings caused by differing interpretations of commercial terminology. In particular, they explicitly state the obligations and costs to be assumed by each of the parties. They also discuss the documents that each party must supply and the transfer of risks.
Terms related to the transfer of property are not defined in the Incoterms. This is because the Incoterms are limited to terms used in the shipping contract, whereas the transfer of property is a matter covered by the sales contract.
The shipping contract:
A new exporter selling to France should also understand the nature of a shipping contract. Such a contract is an agreement signed between the exporter and a carrier or transport company. In return for an agreed price, the carrier transports the exporter's goods within a specified period from one point to another and delivers them to the importer or other receiving party.
International conventions have been signed to prevent conflicts between different national laws in the matter of shipping contracts. These deal with such questions as the nature and form of the shipping contract and the carrier's liability.
The shipping documents embody the shipping contract. They identify the shipper (the exporter), the carrier and the merchandise. They are proof that the carrier has agreed to transport the goods and that the exporter has shipped them.
Shipping through intermediaries:
An export company in a least developed country that does not have its own shipping department must use the services of a shipping intermediary to handle this aspect of its export operations. Various kinds of shipping intermediaries can be called upon, including forwarding agents, customs brokers, freight agents and the carriers themselves.
All necessary information concerning the merchandise must be given to such intermediaries. The main details required are a description of the goods, their value and any special facts about them (for example if they are dangerous or fragile). (Information on such intermediaries in France can be obtained from the French Federation of Customs Commissioners, Freight Forwarders and Maritime and Air Transport Shipping Agents (Federation Francaise des Commissionnaires en Douane, Transitaires, Agents Maritimes et Aeriens): 75 rue de Clichy, 75009 Paris).
Some types of products, because of their nature, are subject to special import regulations in France. Exporters in least developed countries should be aware of such regulations, which may affect the types of products that they supply to France. To be allowed into the country, certain products must pass special inspection concerned with sanitation, cleanliness, plant or animal health and the like, carried out by veterinary or plant protection authorities or by customs inspectors. These regulations are complex and will be covered in only general terms here.
Plants and plant products:
In addition to mandatory plant health inspection, imports of some plant products require a document called the "plant health certificate of origin." This is issued by the plant protection authorities of the exporter's country. The certificate is a printed form that must comply with the model established by the International Convention on Plant Protection of 1951. Some plants and plant products are entirely banned from importation into France, while others are subject to particular requirements such as disinfection or special rules governing their presentation, packaging and the like.
Products imported into France are subject to quality control. Common quality standards of the European Community (EC) exist for some fruits and vegetables. Such produce cannot be imported unless it meets standards that are equivalent to those of the EC.
Live animals and animal products:
Fishery products, both fresh and frozen, as well as certain shellfish, are subject to strict health inspection. In addition, importation of these items requires presentation of a special certificate. These products are also governed by precise marketing regulations with respect to freshness, standard weights and measures, and packaging.
Other types of animals and animal products, including such items as wax and honey, require health inspection and the presentation of special certificates. In the case of meat products, the slaughter of the animals must take place in licensed establishments. In France, a veterinary inspector examines the animals or animal products and then issues a document that either authorizes or refuses entry of them.
For some animal products, in addition to the French veterinary inspection, an exporter must furnish a certificate issued by the veterinary authorities in the country of origin.
Certain animals and animal products are entirely banned from importation (except under a general or special waiver) to prevent propagation of contagious diseases in France. Others are subject to specific regulations.
Trade in some endangered plant and animal species and products derived from them is governed by the Washington Convention on International Trade in Endangered Species of Wild Flora and Fauna. In addition, imports into the EC of ivory from African elephants, including both raw ivory and ivory products, are banned.
Numerous measures are in force in France to ensure that certain categories of imported merchandise meet the same technical standards as those applied to similar goods manufactured in France.
France has around 25 organizations authorized to certify compliance with standards. The most well known of these is AFNOR, the French Association for Standardization (Association Francaise pour la Normalization) (address: Tour Europe Cedex 7, 92049 Paris la Defense). The other certification bodies often represent a particular trade or industry.
An exporter must establish proof that the merchandise complies with current French standards. In most cases, compliance must be proved at the time of making the customs declaration by showing a certificate authorizing the use of the NF symbol (issued by AFNOR), when this symbol has been placed on the products, or if it has not, an affidavit of approval issued by the French Ministry for Industry. For some products, it is enough to show an affidavit from the importer guaranteeing that the goods comply with French standards.
Further information on standards and other regulations applicable in the French market can be obtained from the Government ministries concerned with agriculture, fisheries and the economy; the principal standards organization (AFNOR); the French Centre for Foreign Trade (Centre Francais du Commerce Exterieur, at the same address as PROMEX-PMA); and the French Agency for the Promotion of Exports of Least Developed Countries (PROMEX-PMA).
Information to be included in sales material
On the company
1. Name and address 2. Owner's name 3. Date of creation 4. Telephone, fax and telex numbers, telegraph address 5. Sales manager's name 6. Countries to which the company exports 7. Equipment used 8. Banking and customer references 9. Sales terms
On the product
1. Introduction of the product 2. Dimensions, weight 3. Packaging used 4. Production methods 5. Production seasons (if appropriate) 6. International standards applied 7. Storage techniques 8. Shipping methods 9. Quantities available 10. Prices CIF, FOB and DDP
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|Publication:||International Trade Forum|
|Date:||Oct 1, 1993|
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