Editor’s Note: The Inside Track is a recurring column written by a local business professional. Authors of these columns aim to provide you with their own perspective on a current trend or development within their industry, getting you on The Inside Track.
Vancouver is a major gateway city to international trade. In fact, Washington is the most trade-reliant state in the nation with one in three jobs dependent on international trade, according to the Washington Public Ports Association. Locally, port activities generate $1.6 billion in economic benefit to the region.
While international trade presents local businesses with new opportunities, there’s a fairly steep learning curve when it comes to conducting international business. In-market agents, representatives who are familiar with local laws and customs, can help guide your decisions and ease your transition.
Finding and working with an in-market agent
When moving into or sourcing goods from a new market, having a representative who knows the protocol, regulations and players in a new market can be invaluable. That’s the purpose of an export agent, also known as a distributor. These individuals and companies act as intermediaries, helping you break ground in a new territory by streamlining red tape and providing essential guidance in finding partners to manufacture, distribute and sell your products.
Understanding the arrangement with an agent or distributor and the applicable laws and regulations is critical to getting off on the right foot. You should have an agreement in writing that states the nature of the relationship and how the agent or distributor’s compensation will be handled. This will prevent surprises, such as unexpected fees or costs.
To find a reputable agent start by contacting Export Washington or the Washington Economic Development Commission, which will likely be able to connect you with someone who has been vetted. In addition, your accountant, lawyer or bank representative might be a good place to turn for advice. Having a relationship with any other professional who is part of an international network, or who has other clients who do business internationally, can be extremely helpful. It’s likely they’ll be able to introduce you to additional contacts in this area.
Once you have recommendations, conduct due diligence by screening references and doing an online search to see if there are reviews or other information that can help you find the best possible fit.
Leveraging your bank to manage risk
If you’re leery of international trade because of perceived risks, talk with your banker. Many companies lose out on significant profit opportunities either by avoiding the opportunity, or by failing to take advantage of currency exchange risk-management tools. For example, with floating exchange rates, the strengthening or weakening of the U.S. dollar can diminish your profit margins or affect a trade partner’s ability to purchase your product.
Additionally, you could be leaving money on the table by not accepting payments in the local currencies of your international customers for fear of fluctuation in currency risk. Many companies do not have the ability to pay in U.S. dollars, but your banker should be able to explain how to set up pricing in local currencies and accept and convert those sales to U.S. dollars.
Your bank should also have risk management tools that will help safeguard your business against fluctuating currency exchange rates to the maximum possible extent.
It’s important to understand that your bank isn’t a currency forecaster, but like an in-market agent, your bank should have an established global network of relationships and strategic alliances that can help your business. They should also continually monitor foreign markets to maintain up-to-the-minute information about the economic, monetary, political and global trading climates.
Understanding international competition
With deregulation and the proliferation of free-trade agreements, international competition is increasing and U.S. companies and, more specifically, Vancouver region companies need to be prepared to offer both quality and price advantages. An in-market agent, can help you identify what these advantages should be and help you develop policies and procedures to ensure the viability of contracts. Your bank, through an assortment of risk management tools, can minimize your exposure to loss. When leveraging these two relationships to your advantage, you’ll have a successful formula for seizing an opportunity to expand the reach of your business and gain a profit-boosting advantage over your competitors.
Jeff Taylor is assistant vice president and relationship manager for business banking in KeyBank’s Vancouver office. He can be reached at 360.449.8059 or at firstname.lastname@example.org.