As we discussed in our ‘Export assistance for exporting from South Africa’ article, several governmental, international and private sector organisations are dedicated to growing the number of businesses exporting from South Africa. However, there are some prerequisites that you need to achieve before you begin your international journey. In this series, we look at a few non-negotiables if you are actively trying to begin exporting from South Africa. We will also introduce you to several resources you can utilise to start your export journey.
Exporting from South Africa prerequisite number 1 (the International Trade environment)
International trade is vastly different to domestic business. Before you begin exporting from South Africa, you need to develop an understanding of the global trade environment. For example, you need to understand why countries trade with each other; the role government plays in controlling trade, what implications tariff and non-tariff barriers could have on your business, and acclimatise yourself with the various international trade bodies that impact how international trade takes place.
Export assistance is available to help you understand the Global Trade environment
Module 1 of the Export Foundations course is “Understanding the Global Trade Environment”. Throughout the module, you will learn why countries trade with each other, how countries are usually categorised according to their stage of development and how it impacts what they trade. In addition, you will also be introduced to the case for free trade, and we will explain what trade barriers are and why they exist.
Click here to get free access to the “Understanding the Global Trade Environment” module.
Exporting from South Africa prerequisite number 2 (export readiness)
Once you have developed an understanding of the global trade environment, you need to ensure that your business is export ready, i.e., prepared to enter the global market. Export readiness comes down to your company’s export capability and management’s commitment to the export initiative. The export capability of your company includes ensuring you have the production capacity, processes and products to begin. Sufficient production capacity is a prerequisite for a successful export initiative, as export orders tend to be larger than domestic ones. Your business processes need to meet the rules and regulations of the applicable foreign markets and international bodies. And finally, where your product is concerned, you need to ensure that it meets statutory or legal requirements, is suitable for the international market, and has undergone all necessary adaptations to ensure it appeals to the target market in question.
Export assistance is available to assist you in getting export ready
Module 2 of the Export Foundations course housed on the TFSA/ITRISA School of Export is “Determining Your Company’s Export Readiness”. In module 2, you will learn about the benefits and challenges of exporting and how to differentiate between export and domestic sales. Furthermore, module 2 will outline company prerequisites for engaging in exports, how to assess your product’s exportability and introduce you to the various regulations of foreign markets. Once you have completed the module, a specially designed “Export Readiness” assessment will help determine how ready you are to begin exporting from South Africa.
Click here to get free access to the “Export Readiness” module and export readiness assessment tool.
Exporting from South Africa prerequisite number 3 (marketing for exports)
The next prerequisite to export success involves ensuring that you have done the necessary research to develop a well-thought-out export marketing plan. A comprehensive export marketing plan involves assessing which foreign market and market entry strategy presents you with the greatest possibility of success. Furthermore, you must ensure that you have given your international marketing mix the careful consideration it requires. Far too often, great South African businesses incorrectly assume that exporting from South Africa and selling domestically involve the same marketing strategy. However, numerous factors directly impact international marketing success that you undoubtedly will not be aware of if you have not previously been involved in exporting from South Africa.
Export assistance is available to help you devise your export marketing plan
Module 3 of the free Export Foundations course on the TFSA/ITRISA School of Export is “An Introduction to International Marketing”. The module will give you a high-level understanding of how different natural, cultural/social, political/legal and technological environments in international trade should impact your approach to marketing for exports. Furthermore, module 3 will outline possible market entry strategies, the international marketing mix and how to correctly devise your export marketing plan. Once you have the knowledge to begin constructing your export marketing plan, you can utilise the various International Trade Centre trade tools available through the TFSA Trade and Information Hub to conduct secondary international marketing research.
Click here to get free access to the “Introduction to International Marketing” module.
Exporting from South Africa prerequisite number 4 (export administration)
Once you have completed the necessary preliminary work to ensure that you have a detailed export marketing plan to reach foreign buyers, you then need to understand the export administration process. International trade involves several parties, documents and procedures that ensure the successful conclusion of an export transaction. Any business interested in exporting from South Africa or currently exporting from South Africa must ensure they have the expertise, processes and tools needed to navigate export administration. Failing to do so could kill your dream of exporting from South Africa before it has even begun. For example, incorrectly completing customs documentation or submitting the wrong compliance documents could have disastrous financial consequences. Thus, understanding the export administration process is essential to navigating your international expansion.
Export assistance is available to help you handle the export administration process
Module 4 of the free Export Foundations course on the TFSA/ITRISA School of Export is “Understanding the Export Administration Process”. This module will introduce you to the parties, documents and processes common to a typical export transaction. Ultimately, an international trade transaction requires specific parties to receive particular documents in a predefined process. Thus, module 4 will assist you in understanding who is involved, what documents are needed and what process you should follow when exporting from South Africa.
Click here to get free access to the “Export Administration” module.
Exporting from South Africa prerequisite number 5 (modes of transport)
The next step in ensuring you are ready to start exporting from South Africa is understanding the various mechanisms you could use to deliver your goods. Successful participation in international trade relies on using multiple modes of transport depending on your geographical location relative to your buyer, the product being exported and the conditions it may encounter along the journey. Being able to choose the most suitable mode of transport for an export transaction has a direct impact on profits, reputation and risk. Furthermore, choosing the right mode of transport involves being able to select the transport service best suited to your particular transaction. Unfortunately, countless first-time exporters exporting from South Africa opt for the wrong mode of transport with disastrous consequences. For example, some modes of transport prohibit the transportation of certain goods and some modes of transport need to be used under particular circumstances. Thus, It is essential that before embarking on your international trade journey, you have the expertise necessary to match your product and intended foreign market with the right mode of transport. Opting for the most appropriate mode of transport and transport service for your particular export transaction will help ensure maximum profits, reliable delivery and sufficient risk mitigation.
Export assistance is available to help you opt for the right mode of transport
Choosing the most appropriate mode of transport for your export transaction involves more than just deciding whether you should be using air freight, sea freight, road freight or rail. Thus, module 5 of the free Export Foundations course accessible through the TFSA/ITRISA School of Export will outline several considerations to make when choosing a particular mode of transport. For example, you will learn how different forms of cargo impact the mode of transport used, how different modes of transport impact the risks and costs associated with delivery, and what transport services are available when exporting from South Africa.
Click here to get free access to the “Choosing an Appropriate Transport Service” module.
Exporting from South Africa prerequisite number 6 (the ICC Incoterms® rules)
Hand in hand with delivery is the incoterms® rules. Incoterms® are a standard set of rules developed by the International Chamber of Commerce for the delivery of goods. Incoterms® indicate which party (buyer or seller) to a sales contract bears the risk, costs and responsibilities at any given time during the delivery of goods in a particular international transaction. Whether you are exporting from South Africa, Mozambique, or Eswatini, Incoterms® will play a significant role in your export journey. For example, while the ICC incoterms® rules are concerned entirely with delivery, they play a role in export costing, customs valuation, and contract negotiations. Unfortunately, several businesses exporting from South Africa still misuse and misunderstand the incoterm® 2020 rules, which has landed countless exporters in trouble. Thus, before you think about exporting from South Africa and negotiating your first or next international sales contract, you must understand how particular Incoterm® rules will impact your export transaction.
Export assistance is available to help you correctly use the ICC Incoterm® 2020 rules
The ICC’s Incoterms®2020 rules are essential to anyone exporting from South Africa. However, many find the resources and information pertaining to incoterms® unnecessarily complicated and confusing. Thus, module 6 of the free Export Foundations course housed in the TFSA/ITRISA School of Export has simplified the fundamentals of the incoterms® rules and incorporated easy-to-understand diagrams that demonstrate the risks, responsibilities, and costs applicable to both the importer and exporter under each of the 11 Incoterms®2020 rules.
Click here to get free access to the “Selecting Suitable Delivery Terms (Incoterms®2020)” module.
Exporting from South Africa prerequisite number 7 (mitigating international financial risk)
Once you have a good understanding of the global trade environment; have taken the necessary steps to ensure you are export ready; developed a well-researched export marketing plan; mapped out the required export administration function; chosen the most appropriate mode of transport for your potential consignment and correctly utilised the ICC incoterms® rules, you need to consider the financial matters relating to exporting from South Africa. Doing business at an international level comes with considerable financial risk. Companies exporting from South Africa will have to contend with the risk of non-payment, fluctuating foreign exchange rates, and longer waiting periods before payment. Thus, before you begin exporting from South Africa, you must understand how to mitigate the risk of non-payment, protect yourself against adverse movements in foreign exchange rates and ensure stable cash flow. Utilising adequate international financial risk mitigation could be the difference between success and failure in the global market. However, many potentially great companies are unaware of the mechanisms and products available to mitigate financial risk.
Export assistance is available to help you mitigate your international financial risk
To mitigate the international financial risk you face exporting from South Africa, you need to be able to analyse and identify the various risks inherent in a particular export transaction. Thus, module 7 of the free Export Foundations course “Managing Export Financial Risk” will teach you how to assess international financial risk, explain how the payment method and payment term you choose impacts the risk you face, and introduce you to mechanisms to mitigate the risk you face. Furthermore, the TFSA/ITRISA School of Export currently has modules on “Export Credit Insurance”, “Financing an Export Drive”, and “Dealing with Foreign Exchange Rates”.
Click here to get free access to the “Managing Export Financial Risk” module.
Click here to get free access to the “Export Credit Insurance” module.
Click here to get free access to the “Financing an Export Drive” module.
Click here to get free access to the “Currency Exchange Issues” module.
Is training the only export assistance offered?
Export assistance offered in South Africa is usually only given to businesses that are able to accept and utilise the export assistance provided. We don’t just need more companies exporting from South Africa; we need more companies prepared enough to achieve success exporting from South Africa. Thus, TFSA, in collaboration with the International Trade Institute of Southern Africa, has developed the online TFSA/ITRISA School of Export. However, The TFSA/ITRISA School of Export does not just offer businesses exporting from South Africa practical on-demand information. It is also committed to fostering additional collaborations, such as access to innovative technologies, financial assistance, and international marketing expertise. We are also constantly on the lookout for true MADE IN AFRICA brand success stories to celebrate across our networks. Click the links to join our community and get notified of any additional export assistance available.
To sign up to the School of Export CLICK HERE.
If you already have a profile, CLICK HERE to login to begin the module.